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Sunday, January 30, 2011

Dillard's REIT and Sale-Leaseback Deals

Little Rock, Arkansas - We have information today on some REIT action involving Dillard's and Net Lease Properties. Dillard's has mentioned in a regulatory filing last week that they believe the formation of a REIT (real estate investment trust) may enhance their ability to raise capital and thus improve their liquidity. Dillard's would so a sale-leaseback with specific properties. Dillard's would transfer some properties to the REIT (real estate investment trust) and will then lease back with triple net lease terms.

As the economy continues to stumble, retail stores have struggled to stay afloat. As we mentioned in the past that many retail store companies have their main assets as commercial real estate holdings. With the exception of possibly Nordstrom, many retail department stores are still in need of capital. Commercial Real estate sale-leaseback deals are profitable and they can generate capital for immediate use for the business. The sale-leaseback unlocks the equity that is built up in your commercial real estate investments. Some financial analysts wonder if Dillard's is possibly trying to take advantage of the favorable market conditions that currently exist for (real estate investment trust) REIT's.

Dillard’s is still controlled by the Dillard family with Mr. William Dillard, II as the Leader. Although it is a publicly-traded company, the Dillard's name can draw investors for the REIT. It could be approximately 240 stores to be transferred into the REIT via a sale-leaseback. The Investors of the REIT could benefit from the steady income from the "NNN" triple net lease properties. Our NNN Commercial Real Estate Investors are actively seeking triple net lease properties. The Tenant, Dillard's in this case would be responsible for the rent, all taxes, insurance, and maintenance expenses. We also wanted to report that Dillard’s formed an insurance company, which is a wholly-owned unit to help efficiently manage their investment risks.

Dillard’s is a Little Rock, Arkansas-based company that has been in business for over 70 years. Their stores are anchor-tenants at many Retail Shopping Centers. Most of these Retail Shopping Centers are class-A and class-B regional shopping malls in many states in the east. Dillard’s competes at many Retail Shopping Malls with the likes of Kohl's, Macy's, Nordstrom and Bloomingdale’s. Dillard's commercial real estate portfolio currently consists of almost 300 stores. Dillard’s owns approximately 46.4 million square feet of retail space, with much of it in desirable retail locations. Some large shareholder at Target Corp. (TGT) had thought of a similar idea recently. A leader at Target thought to enter into commercial real-estate sale-leaseback deals whereas Target would dump the commercial land under its the retail stores, and end up with Ground Leases. Many NNN Commercial Real Estate Investors would favor these types of Ground Lease with Target however that deal is not in play. NNN Commercial Real Estate Investors might also look at Sears or J.C. Penney with a Sale-Leaseback and possibly absolute NNN Lease Investments or Ground Leases.

More history of these types of commercial real estate deals are when Steven Roth bought the bankrupt department store chain’s Alexander’s. The brilliant investor Steven Roth paid approximately $53 million for the deal and spun off its commercial real estate holdings into a REIT. That REIT is currently managed by the Vornado Realty Trust. Steven Roth had a very valuable asset attached in that deal and that was the Bloomberg Tower, in New York City. The Bloomberg Tower is a 1.4 million square-foot mixed-use property that is built on the site of a former Alexander’s store.

Contact Net Lease Properties to sell your net lease properties, purchase NNN Property or 1031 exchange opportunities.

If you are ready to purchase Commercial Real Estate or a Triple Net Leased Property, you can apply for Commercial Loans at


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