Global real assets investment management firm CBRE Investment Management (IM) has bought Tenet Equity, a net lease real estate platform as part of plans to expand the company’s net lease asset strategy.
Tenet has a $1.6bn (€1.4bn) portfolio of 208 net lease assets totalling approximately 12m sqft across 39 states with a weighted average lease term of 16.7 years, CBRE IM said in a statement.
The fully leased portfolio is expected to generate long-duration, contractually growing, rental income across a diversified tenant base, the firm said, adding that it was making the investment on behalf of several of its investment strategies.
“Net lease offers what few sectors can: durable, growing, inflation-protected income with long lease terms and low capital requirements,” said Adam Gallistel, co-CEO and CIO of CBRE IM.
“We are excited to deliver compelling investment opportunities to our clients by pairing our portfolio management and execution capabilities – together with the net lease resources of CBRE Group – with Tenet and its proven track record of sourcing and managing mission-critical real estate.”
In conjunction with the acquisition, CBRE IM is launching a strategy to further invest in net lease assets and support the ongoing growth of the Tenet platform. Akash Shivashankara, a senior portfolio manager at CBRE IM with expertise in managing operating partnerships across a 20+ year career, will head the strategy.
Tenet specialises in sale-leaseback financing, providing long-term, efficient capital solutions to help middle-market companies monetise real estate critical to their operations without giving up operational control, CBRE IM noted.
In terms of the size of the addressable net lease market, CBRE IM said it “conservatively” estimated that several trillion dollars of corporate-owned operational real estate sits on the company balance sheets of middle-market companies in North America, with institutions holding just 1% of the addressable market.
“Our commitment to the companies we serve does not change with this transaction,” said Nicholas Eggert, CEO of Tenet. “With CBRE Investment Management’s deep operating expertise and global investor relationships behind us, Tenet is better positioned than ever to accelerate our growth and maintain our continued leadership in the net lease industry for years to come.”
Truist Securities acted as financial adviser to CBRE IM.
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