Is there any data that would show how cap rates in STNL buildings change as the credit rating of the tenant changes?
I'm looking for data on how much the cap rate of a property is influenced by the credit rating of the tenant. Specifically, I'm looking for the change as tenants move into or out of investment grade credit.

Any ideas where I can find data sets or more info?
[{"id": "fovwp7o", "text": "I can help. Send me a private message.", "replies": [], "depth": 1}, {"id": "fovxf1q", "text": "Net Lease Advisor should give you that info online for free.", "replies": [], "depth": 1}, {"id": "fow63ki", "text": "As others have also asked, can you please post (or PM} the results?", "replies": [], "depth": 1}, {"id": "fowecs1", "text": "Cap rates before the virus were \\~4-5%, depending on the sector/credit, and the 10 year was \\~2.50%, so an implied premium of \\~250 bps. That was when IG corporates were trading \\~70 bps wide of the UST, so implied premium for the NNN lease of \\~200 bps. Now IG corporates are \\~200 bps to UST. So, that alone should imply a \\~130 bps widening of the spread between cap rates and UST, which would be \\~380 (10 year is now 60, so \\~4.40%, not much movement, which makes sense and is consistent with what's happening on any trades that actually occur - e.g. google or amazon single tenant deals are still in the 4-5 range). HY corporates went from \\~300 to \\~650, so the implied gap between IG &gt; HY is \\~450.\n\nI would estimate the cap rate to blow out 500 bps overnight for a credit downgrade... especially if the name is on the \"losing\" bracket side of the retail tournament.", "replies": [{"id": "foxc9pj", "text": "A 500 bps swing overnight? Credit would have to be downgraded to junk for that to even get close, and overnight is a stretch. A HUGE stretch. Imagine the correction in the real estate market, especially financing, if that happened overnight. What\u2019s RiteAid credit right now? It\u2019s pretty soft. And a RiteAid deal isn\u2019t trading for 500 bps off of Walgreens or CVS. \n\nThink through the \u201cmark to market\u201d exercises that happened in 2008-2011. If credit downgrades and values were impacted by a 500 bps change in any short order, the amount of borrowers that would be in technical default would be painfully huge. Lenders with large real estate exposure of any leverage level would be in trouble, to say the least. \n\nAssume this transaction: a corner drug store trades at 6.25% cap on a $4.0 million deal. That would impute an NOI of $250,000. Assume a leverage of 65% LTV and we\u2019re inside our first year of the deal. Our loan balance is basically full at $2.6 million. Now, that same tenant gets downgraded and the cap rate lifts by 500 bps. You\u2019re now at an 11.25% cap. 11.25%! That means the new valuation of the real estate is $2.22 million. We now have a technical default because we\u2019re at 117% LTV with loan covenants that demand our leverage never exceeds a preset amount (say 70%). We are still collecting the same rent, but we have to right size our loan with capital injection of $800,000. \n\nI\u2019m not a banker, but I stayed at a Holiday Inn Express once or twice. And I\u2019m sorry to tell you that the guidance you gave carries very little water. Like, maybe a thimble full. Maybe.", "replies": [{"id": "foxfk41", "text": "HY is junk. That\u2019s exactly what I mean. How much you think movie theaters with AMC impending BK is going to trade for right now? Maybe 500 is aggressive but I\u2019d say value would drop at least by half so that\u2019s 5-&gt;10 easy", "replies": [{"id": "foxh556", "text": "RiteAid is 8 tranches in ratings below CVS. CVS is Investment grade, RiteAid is Speculative, according to Moody\u2019s. What\u2019s the difference in cap rates? \n\nMovie theaters are an anomaly in commercial real estate. That ship has been sinking for years. Everyone knows it. How much are crappy popcorn, a soda, and sno caps actually worth? \n\nThink through the fundamentals of business, especially given the last 45 days. There are many businesses that are on life support, and nobody is going to own it just yet. \n\nWatch JCPenney, Best Buy, Dick\u2019s Sporting Goods, the glamorous fitness chains, and dominant grocers. They will be lucky to survive the next five years. Kroger may make it ten. But that\u2019s going to be pushing it.", "replies": [{"id": "fp04dc1", "text": "I don\u2019t understand what your thesis is. Are you saying no difference? What\u2019s your estimate? Not that it matters - good luck getting estoppels to close when the retailer is gone fishing. They\u2019re not signing jack if they all think they\u2019re entitled to rent relief. Or if the lease gets rejected in Bk. You can use whatever cap rate you want on $0, it\u2019s still $0.", "replies": [{"id": "fp09b94", "text": "My thesis is that there\u2019s been amnesia in the real estate market. The correction that happened in 2008-2011 stayed on people\u2019s minds for as long as a gold fish\u2019s memory. Cap rates went crazy again, and the fundamentals of the market were lost in that timeframe. \n\nReal estate is valued three different ways: income approach, sales comparison approach, and reconstruction approach. One of those is typically lost in the effort, and it\u2019s almost always reconstruction approach. \n\nDo you remember the retailer Steve &amp; Barry\u2019s? They were a pre-recession crash. Completely over valued. Froth on top of an extremely frothy market. Nobody paid attention to the fundamentals of real estate then, and they\u2019re not paying attention now. Movie theaters have no easy secondary use. Car dealerships, auto repair shops, even big box retail. Second generation users are nil. \n\nIf you have some experience that can direct me otherwise, I\u2019m happy to hear it. But the first response you gave was anemic, at best.", "replies": [{"id": "fp0a5k5", "text": "Eh maybe because I\u2019m a lender and I\u2019m looking at my $10B portfolio and seeing several that I think I will get the keys for. And these were 50% ltv deals that are now arguably underwater. I think you can come up with any fancy math you want to, but the reality is no one is buying unless it\u2019s 25%+ off compared to yesterday, no one is going to refi you out to save you, if you have a CMBS loan on one of these STNL deals (or any deal for that matter), good luck getting someone to answer the phone. So Borrowers are going to have to open up their checkbooks and pump some money into the system or they\u2019re wiped out. Doesn\u2019t matter what cap rates do when your equity goes to $0.", "replies": [{"id": "fp0bqca", "text": "How long have you been a banker? And how many recessions have you gone through? Are you familiar with the RTC? Did you go through the 2008-2011 debacle? \n\n\u201cThis too shall pass.\u201d\n\nEverything corrects. No matter what.\n\nAs a borrower, a broker, a manager, and an economist, I\u2019ve watched the cycles happen. I\u2019ve read about the ones I wasn\u2019t present for. It gets nasty. Very, very nasty. I\u2019ve been the buyer of debt, and I\u2019ve been on the debtor\u2019s side of a very protracted legal battle with a large regional bank when we were deemed in \u201ctechnical default\u201d. \n\nWhen the market is going up, appraisers stretch to confirm values. They are your (banks) gatekeeper. And when the market turns, they get very rigid in their perspectives. They operate from their rear view mirror. So, the pendulum swings. \n\nI sat on the Strategic Planning committee for the CCIM Institute through 2007. I regularly beat my drum about the coming market correction (with no understanding of how bad it was going to be, just knowing that fundamentals were WAY off course), suggesting that we create a course platform for what was inevitably coming. I was the young guy in the room. Everyone just kept placating me with the notion that we should \u201cjust keep making money, and it will be okay\u201d. Guess what? It wasn\u2019t okay. I felt the pain, my friends felt the pain, and there were people actually committing suicide because they couldn\u2019t come to grasp with having to face their own collapse. \n\nAnd it\u2019s coming back around. Just like economic cycles do. About every 10 years. \n\nLearn from it. Then figure out how to make money from it. Money is made from problems and opportunities.", "replies": [{"id": "fp0u3zd", "text": "Of course it will pass. OPs question was about the near term. When the first hammers started to blow a few weeks ago, IG corporates were pricing 600 wide overnight. I\u2019ve been through a couple cycles and also merchant built 5 NNN pads myself before the last recession. I know the product and I know the investors - and I know what happens at the on set of a liquidity crisis which is what we\u2019re in now. If $2T in Fed action isn\u2019t a liquidity crisis then you tell me what is.\n\nYou seem to keep proving my point - trades in the short term will certainly be disrupted and trades that do happen will be opportunistic/distressed, hence my projection of cap rates blowing out substantially for below IG, single tenant binary type risks. Especially so for a type of credit that is MIGRATING to HY. That\u2019s going to be distressed myfriend - you don\u2019t think it just stops there do you?\n\nYou still haven\u2019t given an estimate. Are you going to go price is right style and say 499 to make my 500 sound absurd? Let\u2019s hear it, and your support. I price against corporates every day and I have a huge research team to back it up. My PMs are driving relative value vs corporates every week so I know what\u2019s going on in the capital markets.", "replies": [{"id": "fp0wvhy", "text": "You are definitely more well versed than me. I concede. \n\nRiteAid is considered speculative according to Moody\u2019s, and CVS is Investment Grade. Show me a RiteAid deal that prices 500 bps higher than Walgreens or CVS and I\u2019ll bring you 5, 10, or even 50 cash buyers for that. You won\u2019t have to worry about financing. \n\nI don\u2019t need to compare cock size with you. Your initial point didn\u2019t hold water. You know that. The people that read your statement knew it too. You tried to flex muscle that made you look the fool instead of making you sound smart. And now you\u2019re butt hurt because you got called out. \n\nHave your analysts send me their perspectives. I\u2019ll print them on tissue paper so I can wipe my ass with it, because that\u2019s the true value of what they\u2019re putting together. Analysts are trying to create perspective on a black swan event, and nobody knows where it\u2019s going. \n\nAnd, yes, there\u2019s a liquidity crisis. And a real estate crisis. And a healthcare crisis. And an infinite number of other crises. The whole world is in crisis. This isn\u2019t new news. \n\nIt\u2019s probably Trump\u2019s fault. Orange man bad!\n\nAnd, seriously, c\u2019mon, dude. Nobody cares if you manage $10, $10M, $10B, or $10T of real estate loans. That\u2019s a benchmark you use as fodder for your own ego. Unless that\u2019s money you created, it\u2019s moot.\n\nHave a wonderful night.", "replies": [{"id": "fp2pj17", "text": "You're very focused on pharamacies for some reason. What about a wework building? Gyms? Any other number of non essential retail or \"experiential\" users that aren't going to see a dime of business in some places for several months. Those credits are junk territory and their leases will be worthless - value cut in half is probably aggressive, but even for stable, multi-tenant we're seeing 25-30% at least.\n\nYou still haven't given a number. Let's hear it big guy.\n\nLastly, I don't know when we crossed the point in this debate of becoming insulting. If we were talking face to face, you wouldn't speak to me like that. Not saying that in an alpha male context, but in a professionalism context. The fact is i am an executive at a F500 RE asset manager and I negotiate with ceos of billion$ reits, capital markets directors at jpm asset management, blackstone, you name it. I point out the level of my portfolio to let you know the type of experience i have, not to stroke my own ego - who the fuck cares what folks on reddit think.\n\nYou're a.... pizza shop owner in fucking... toledo. Christ. why am i even wasting my time. Reading your post history, you seem to get a lot of validation from nobodies on reddit sucking your dick about being an awesome pizza shop franchisee who word vomits corny managerial / investing axioms like he's in an 80s movie. that may impress your 16 year old junior managers that you're trying to bang, but saying things like \"location location location\" will get your ass thrown out of any investment committee meeting. \n\n&amp;#x200B;\n\nwe're done here.", "replies": [{"id": "fp2yc7k", "text": "You nailed it. Congrats! \n\nI\u2019ve owned pizza stores. I\u2019ve owned real estate. I\u2019ve owned staffing, technology development, construction, real estate development, and a handful of other businesses. I still own them. I\u2019m an investor, an opportunist, and a fund manager. I\u2019ve done over a billion dollars in acquisitions, development, brokerage, and redevelopment deals. A billion. I put my own skin in the game. I\u2019ve never had a job as an adult because I eat what I kill. I\u2019ve had thousands of employees. Literally thousands. \n\nWhen I win, it\u2019s because of me. And when I lose, it\u2019s also because of me. Nobody is laying me off. \n\nAnd, I would say the exact same stuff to your face as I have here. \n\nNow, on tenant credit. WeWork has been a train wreck since it became well recognized. It has not had a positive cash flow in God knows how long. It has been a sinking ship. To underwrite it as if it had any credit was foolhardy. And that has been further complicated by the reality that the founders were self dealing in their own real estate. They were playing poker and dealing from the bottom of a very stacked deck. The lenders and Wall Street types went along with it. \n\nGyms... that was a losing proposition. Build big glamorous buildings that are basically single use, for a tenant who is making their sales push for one month of the year, on a membership that is completely disposable when shit hits the fan. That\u2019s investment grade? Sorry. I disagree. \n\nNon-essential is just that. It\u2019s NOT ESSENTIAL. Retail is made up of a lot of it. And Amazon has been changing the face of that business very loudly. You can\u2019t get a haircut on Amazon, but you can get a whole bunch more done through them. \n\nHere\u2019s what you can\u2019t get on Amazon, very easily. Jamba Juice/Tropical Smoothie/similar, Burger King/McDonald\u2019s/Taco Bell/Panda Express/similar (like pizza, for instance), nail salon/spa, hospital/doctor/urgent care, and there are a few others. But, telemedicine will be a substantially growing effort after this. \n\nSo, is GNC a good credit? No. Vitamin Shop? Nope. Mattress stores? Nope. Furniture stores? Nope. Jewelry stores? Sorry, nope. Sandwich shops? Mostly nope. Hobby Lobby, Office Max/Depot, Bed Bath &amp; Beyond, Staples, Michael\u2019s? Their fundamentals aren\u2019t really that strong. So, nope. Kroger? Right now, they\u2019re good. Amazon will put them into bankruptcy. Bet on it. Walmart? They\u2019re trying to follow Amazon, so they may survive. Target? See what the next 10 years brings. Home Depot and Lowe\u2019s? Safe for a bit. \n\nIf you like to read, check out \u201cThe Big Short\u201d by Michael Lewis. It was made into a movie, if you don\u2019t want to take the time. Another great one is \u201cOther People\u2019s Money\u201d by Charles Bagli. They\u2019ll\nboth enlighten you to what you\u2019re dealing with right now. \n\nWe\u2019re experiencing a black swan event. Probably the black swan event of black swan events for our lifetimes. \n\nBut, you\u2019re an executive at a Fortune 500 company, you know the big names, and you\u2019re not from Toledo, Ohio. So, I really should just kiss the ring. I do appreciate you trolling my Reddit profile. At least now I know you\u2019re a closet fan. \n\nFor sake of discussion, there is no level of insulation that keeps anyone\u2019s job safe. When the shit hit the fan in 2008, I had plenty of friends in investment houses on Wall Street whose lives were boiled down to a few boxes to pack their offices into. These were guys who had been in their jobs for 15-20 years, and they mattered none. Zero. Zip. Zilch. \n\nNow, I have to get back to impressing worthless minions with my 80\u2019s movie lines. \n\nGodspeed!", "replies": [{"id": "fp3kogu", "text": "I've read them all bro. years ago. serveral people quoted in other people's money are the guys i work for now and pitch deals to on the regular.\n\nstill didn't see a estimate of your \"informed\" movement in cap rate expectations. all just a bunch of bullshit word vomit, as usual in your posts.\n\nbtw Simon Property Group (SPG), another organization i worked for in the past, had an implied cap rate of 12% few weeks ago. and they're IG credit with a fucking army of asset managers and leasing experts - largest public REIT in the world. malls were trading in the 6's before. so, 2x in spread isn't outlandish.\n\nbut you apparently know more than the rest of the world. Not sure i believe that coming from someone who grew up with addicts, got abused by siblings, asks for advice on how to pick up women on the fucking internet from strangers and is a middle aged, overweight pizza guy. you're a salty, loser who needs validation from other pathetic losers on social media.\n\ni made a good faith effort to answer OP's question and you want to come at me with corny quotes you read off of motivation posters in your shitty pizza parlors. man up and give an indication - with all your brilliance it shouldn't be hard. maybe your faggot brother can help you.", "replies": [{"id": "fp3qjxl", "text": "First, I\u2019m not your bro. \n\nSecond, there is nothing informed about where cap rates will go. It\u2019s a black swan event that has never happened in the history of our country. So, there\u2019s no data to drive any guidance, only reactive fear that will play out as a new normal is realized. But, 500 bps overnight is highly improbable. \n\nThird, I sold out of the pizza business because I had realized the opportunity and chose to take that step. That was  a decade ago. Where were you a decade ago? \n\nFourth, I\u2019m happy you trolled my profile. Really. Actually pleased by it. I\u2019m also very glad you can read. Do you want me to validate you by putting your posts back in your face? I can. But, I\u2019ll choose not to. \n\nFifth, what has happened in my life is called experience. Good, bad, ugly. Some is real ugly. I\u2019m not ashamed of any of it. I will actually share with people where it can help. And, I am middle aged. I\u2019m also not in great shape, but I can hold my own. I was born with a heart defect. I\u2019ve had emergency heart surgery, three strokes, and I still will outwork almost any young person. I\u2019ll even go so far as to say I can probably outthink them. I\u2019m a traumatic brain injury survivor, I was ejected from a vehicle in a two fatality accident when I was twelve, and I have been on death\u2019s door a few times. But, I\u2019m still here. \n\nAnd, finally, I am hopeful that you make it through this downturn unscathed. The world needs more people like you. You are leadership material. Simon should\u2019ve made you a regional director and a board member, at the very least. Their loss. Really. You exude the kind of personal confidence a publicly traded company needs. I wouldn\u2019t be surprised if they call you and beg you to come back. Big raise, fancy office, prestigious title. You deserve it. Or maybe Blackstone will come your way. Steve Schwarzman is needing someone to fill his spot. You would be perfect. \n\nIf you get that big promotion, hit me up. I\u2019ll come schlep your coffee for you. It would be an honor to work for such a powerful person. I\u2019d even do it for minimum wage. Probably even free. Just getting to be around someone as stunning as you, a guy who manages TEN BILLION DOLLARS IN HIS PORTFOLIO, would be the pinnacle of my career. But, my Toledo, Ohio clothes might not be good enough to be in your presence. I\u2019ll have to hit the thrift stores for some new threads before I can start my new job, err volunteer position. \n\nI\u2019m going to start including this in my nightly prayers. You know, that I can come be your office slave. It will be great! I\u2019m going to make a plan with how I will manage my transition to wherever you are. Where are you, anyhow? I need to know if my Midwest jalopy can make it that far. I\u2019ll start collecting cans to get a new car. Well, new to me. Just something reliable. I\u2019m not fancy. Just an overweight, pizza slinging, salty ass loser looking for internet validation. \n\nDid you play sports in high school? I feel like you were an athlete. Probably multiple sports. Maybe even played in college. Like, full scale, or just intramural? \n\nGood talk. Really. You\u2019re the highlight of my life right now. I miss you when you\u2019re not responding. Like, a massive hole in my soul when I don\u2019t hear from you. I yearn for some kind of interaction. No homo, of course. I feel like we\u2019re soul mates. Cut from the same cloth, you and I. I\u2019m the ragged edge. The trash part. But, still.", "replies": [{"id": "fpkq02f", "text": "AMC issued paper at 11% YTM and now trading ~16%.\n\nDelta issuing paper at 7%\n\nHertz potential bk\n\nfalling angels getting fucking gobsmacked.\n\ni'm working a $150MM STNL deal for a healthy Baa1 aerospace defense name and the deal already re-traded 25% after covid 19. imagine that was a name that migrated below IG... deal would be dead. there's no bid for that trash except buyers looking for distressed shit. \n\nyour thesis is blown you dumb fuck", "replies": [{"id": "fpkviux", "text": "There you are! I\u2019ve missed you!\n\nLook at what you\u2019re referencing. There are opportunists (the buyers re-trading deals), and bag holders (the companies that were running on a bad business model or on weak balance sheets). It\u2019s not new to business. With corrections happening, the weak will shake out. It happens at the spikes in every curve (up and down). \n\nThat\u2019s not an indication of the entire market, but an indication of who was swimming in the nude. Warren Buffett had a great bit during the market turmoil of 2008-2011. It was in an interview with Becky Quick on CNBC. He said something to the likes of \u201cwhen the tide goes out, we learn who has been swimming in the nude. It appears Wall Street has been a nude beach.\u201d\n\nI would imagine you\u2019re either an only child who was given way too much leeway during your upbringing, the youngest child who made a lot of noise but nobody paid attention to because you were obnoxious, or the oldest child who thought everyone needed to hear what he had to say. \n\nYou\u2019re probably under the average height, too. 5\u20196\u201d - 5\u20198\u201d tall? Shorter, maybe? Red hair? Or are you balding? Red hair AND balding??? An ego problem is sure hanging around your neck like an albatross. Do you give yourself the finger guns when you look in the mirror?? Wear skinny jeans that are supposedly fashionable, and you try REAL hard to look good, but you mildly resemble Ed Sheeran with trisomy 21? \n\nYou\u2019re a monkey in a suit, young fella. Your value is only as high as the last time you kissed the right person\u2019s feet, and you\u2019re disposable. Let that sink in. You\u2019re disposable. We all are. And when you realize that regurgitating whatever the hot bit of the minute is, and locking yourself in the golden handcuffs of the livelihood you think you\u2019re supposed to live is a trap you bought into, it\u2019ll be too late. \n\nBut, you do you. Finger guns and all.", "replies": [], "depth": 16}], "depth": 15}], "depth": 14}], "depth": 13}], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fowhzud", "text": "The Boulder Group has some pretty granular data. You might be able to overlay credit ratings and get what you want.", "replies": [], "depth": 1}, {"id": "fowty80", "text": "They don\u2019t move much unless it\u2019s drastic credit change, like Sears, or Best Buy a while back.\n\nI\u2019m not extremely sure on Walgreens credit but I think they\u2019ve moved 2-3 traunches but CAP is basically unchanged.", "replies": [], "depth": 1}]