It is late July 2020 and we are 4+months into the COVID Pandemic. While certain industries such as casual dining have been hit hard, across the board triple nets are in high demand. They provide stable income in a volatile situation and act as a great hedge against inflation. A new category has even emerged deemed “Essential Retailers”. Drug stores, Dollar Stores, Grocery Stores, Convenience Stores, and Home Improvement fall into this category, have thrived during COVID, and cap rates on these deals have become more aggressive. Tenants such as Dollar General have proven their value and demand has sky rocketed. Investing in these assets makes more sense than ever as they have to stay open for the survival of many.
It is more important then ever to do your research! Auto Stores have done well and fast food (with drive thru’s) have been able to succeed as well. The question you will have to ask yourself is whether you are comfortable investing money into hobby or non essential businesses once this is over. Are there still going to be buyers for $10M+ Fitness Centers and Movie Theaters that have been amongst the hardest hit? Only time will tell, but for now it is clear that owning a triple net asset with an essential tenant is more valuable than ever.