CBRE Investment Management Buys Tenet Equity in Push Into Net-Lease Real Estate

CBRE Investment Management Buys Tenet Equity in Push Into Net-Lease Real Estate

CBRE Investment Management, the investment arm of CBRE Group, is making its first move into the net-lease sector with the acquisition of Tenet Equity, according to a report by PEI Private Real Estate.

Net lease — a structure in which tenants cover many property-level costs such as taxes, insurance, and maintenance — has become one of the more actively pursued strategies in commercial real estate, with managers drawn to the longer lease terms and comparatively predictable cash flows the model can offer. By acquiring a platform rather than building one from scratch, CBRE IM gains an immediate foothold in a segment where it had not previously operated.

The deal extends the reach of CBRE’s investment-management business at a time when parent CBRE Group has been broadening beyond its traditional brokerage and advisory roots into recurring-revenue activities, including investment management and building operations. Adding a net-lease capability gives institutional clients of the firm another vehicle option in a category that has attracted growing allocator interest.

The acquisition lands during a choppy trading session for the parent company. Shares of CBRE Group were changing hands at $142.26, down about 4% from the prior close of $148.20, valuing the commercial real estate services firm at roughly $42.8 billion. The company, which operates through its Advisory Services, Building Operations and Experience, Project Management, and Real Estate Investments segments, has been expanding its investment platform across several property types in recent years.

Terms of the Tenet Equity transaction were not detailed in the report.

What to watch

• Details on the size of the acquisition and any capital CBRE IM plans to commit to net-lease strategies.
• Whether the firm launches dedicated net-lease funds or folds the strategy into existing vehicles.
• CBRE’s upcoming quarterly earnings, where management may outline its investment-segment growth plans.
• Broader net-lease market activity, as other large managers weigh entries into the sector.

Source: original release