Sherwin Williams Triple Net Investment Property offer real estate investors solid predicable returns. Sherwin Williams Paint Stores make a good real estate investment because they enjoy a Standard & Poor’s Investment Grade credit rating of “A-“.
Sherwin-Williams stores have long been considered desirable real estate investments–and for good reason. The company has been around since the conclusion of the Civil War. Since then, it has grown to become one of the largest chemical, paint and coatings companies in the world. Besides its longevity, Sherwin-Williams’ debt is rated “A” (recently upgraded from “A-“) by Standard and Poors (S & P). As a real estate investment, Sherwin-Williams retail properties possess many attractive qualities.Sherwin Williams Investment Properties are viewed as not only a very stable assets but also generally available at attractive price points–many under $1 Million. Sherwin-Williams investors are rewarded with a long-term, stable tenant.
Despite these positives, Sherwin-Williams stores, as a real estate investment property vary in returns you might find offering capitalization rates in a range of anywhere from 6% to 10%. This wide range creates and interesting trading environment if trying to accurately value a Sherwin-Williams asset. It then becomes somewhat difficult for buyers and sellers to agree upon fair prices and capitalization rates for the investments.
Sherwin Williams stores do have a very high lease renewal rate and this can justify the lower cap rates observed in the marketplace. Another factor that seems to drive Sherwin-Williams cap rates lower is the overall scarcity of product. The company does not operate as many stores as many retailers so the universe of potentially available properties is somewhat smaller. Beyond this factor, relatively few of the stores in existence ever come to the market.
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The Cap rate diversity in Sherwin Willimas Triple Net Lease Investments can be explained by looking at the wide range of real estate choices found among Sherwin-Williams properties. It is estimated that approximately 2/3 of the business done in a typical Sherwin-Williams is from contractor sales. Consequently, some Sherwin-Williams stores may not be located on main street locations
Sherwin-Williams Properties are a destination, in some cases the company’s stores may thrive in convenient but not necessarily first tier locations. Some of these stores may be located in even what would be considered quasi-industrial locations, rather than trophy retail locations. Sherwin-Williams may in fact be able to survive and thrive with some sub-standard locations due to their reliance on contractor and other non-impulse customers. Such locations, however, may end up being penalized in the net lease marketplace from investors unwilling to buy what they would consider to be inferior locations at low cap rates.
Other factors that influence favorable investor sentiment for Sherwin-Williams properties are the shorter-term and double-net nature of the company’s leases. Typically the base term on the company’s leases are 10 years and typically the landlord with have modest responsibilities with grounds maintenance, roof, and structural. These factors however also scare off some investors which might pay lower cap rates otherwise, and has generally kept away institutional investors.
Sherwin-Williams stores still provide an excellent investment choice for the smaller commercial real estate investor. Many can be purchased at excellent costs per square foot and at reasonable capitalization rates. Always evaluate the real-estate specific characteristics of each Shewin Williams Triple Net Lease Investment Property offering carefully.
The Sherwin-Williams Company (NYSE: SHW) Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams®, Dutch Boy®, Krylon®, Minway®, Thompsons® Water Seal®, and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 3,500 company-operated stores and facilities, while the companys other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributions. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 70 countries around the world. For more information, visit www.sherwin.com.
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