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Those other businesses can be drugstores, fast-food chains, sit-down

restaurants, movie theaters, daycare services, automotive centers, or even gas

stations… a wide range of offerings, to be sure.

Because of the independent nature of these structures, it only makes

sense for freestanding retail REITs to use triple-net leases. That way, the

tenants can run their establishments as they see fit, staying open all night or

moderating their hours as they so choose.

Once upon a time, businesses were much more likely to buy out the

entire property and build their own stores, taking full ownership over their

establishments. However, that trend has been shifting enough that several

formerly private freestanding retail REITs have gone public over the last 10

years.

Certainly, there’s still the pride aspect of owning what you run. That

does still exist. But there’s an increasing drive toward the comfort that renting

entails. So much so, in fact, that many businesses are selling their buildings

over to REITs to rent from there.

By doing so, they free up immediate capital to further invest in their

operations, while still maintaining fundamental control over what they do

and how they do it.

WHAT YOU NEED TO KNOW

ABOUT SELF-STORAGE REITS

Similar to apartment housing, self-storage demand is mainly driven

by population growth, jobs growth, and the like. It can also be attributed to

archiving property for future generations, or a simple desire to hoard.

With that in mind, it only makes sense that homeowners are less likely

to rent out self-storage space than apartment owners. They have more room

to work with. As such, location is just as important with these properties as

with any other kind of equity REIT.

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