As someone that used to spend a lot of time looking at those net leased properties, particularly chain retail, drug, and restaurant properties, I have to laugh. When companies like K-Mart and Circuit City first showed signs of weakness, suddenly their store properties showed up as high quality absolute net investments on LoopNet. Can't remember specifically who did this, but raising capital through sale leasebacks was a common strategy. You could kind of predict the failure 12 to 18 months later... The name brand drug stores were similar, although it was usually a property owner selling. The property would sell, and the location would close within a year or two. All of a sudden, you had an empty building with the retailer paying the minimum base rent instead of a percentage of gross sales. Nothing like a vacant building you don't control that may or may not get subleased to a less than desirable tenant.
I will take the management hassle of dealing with smaller tenants, particularly NOT retail tenants, over those breathtakingly low cap rates for so-called credit tenants and their mailbox money.
