We don't always expect instant market returns on investment. We buy properties for the very long term, with the intention of holding past the termination of the existing tenancy. In making a purchase decision, we consider a property’s overall projected rate of return – including, especially, its future residual value. Consequently, unlike other buyers with shorter time horizons, we do not have any hard and fast requirements for minimum “cap” rates or minimum lease terms, as these are only some of the many factors we consider. We prefer buying properties with rents that are below the market.
We will also purchase properties with much shorter lease terms (sometimes, even less than one year). In such cases, we focus more on the investment merits of the real estate itself – its location, condition, demographics, suitability for alternative uses when the current tenant vacates and the expected cost of re-positioning the property for a needs of a successor tenant.