It will depend greatly on several factors:
1. Is it a national credit tenant?
2. Is the lease guaranteed by the corporation or a franchisee?
3. What is the strength of the lease guarantee?
4. What is the term of the lease? What are the terms of increases? How much and how often?
5. Where is the location?
6. What are the demographics of the location?
7. Is it a stand-alone building, part of a larger center, in-line or end unit?
8. Is it a land lease or land and building?
These are the standard questions. The stronger the property the lower the cap-rate. (Not sold on "multipliers, unless you are talking about the business-opportunity and not the ownership of commercial property). Generally, the cap rate will range from a 5.5% to a 7.0%. A higher cap-rate than this on this type of NNN property portends much greater risk of investment, which is usually not welcomed by a NNN investor looking for security.
Rob Baird, CA RE Lic. #544165 (One of the oldest, active licenses in CA)
Aug 27, 2010