Dear Partners:

By now you have all received our latest investment offering, AP Industrial 23, LLC.   This LLC includes three single tenant industrial buildings totaling 693,501 square feet: a 463,320 square foot industrial building in Marion, Illinois leased to Aisin World Corp. of America.; a 120,000 square foot industrial building in Lawrenceburg, Tennessee leased to Blickman Industries, LLC; and a 110,181 square foot industrial building in Stanford, Kentucky leased to DecoArt, LLC.  We are excited to kick off the Spring with this portfolio.

As we mentioned in earlier communications, our team is currently putting the finishing touches on the 2022 annual report.  We are extremely grateful for the strong finish Team Agracel had in 2022. I am starting to sound like a broken record but, once again, we saw another record year in all metrics.  Later this month, we will be releasing the report entitled “Reaping What We Sow” and I am anxious for you to see our results!

We enter into the summer months cautiously optimistic.  Time and time again, we are asked our take on the current market and what it means for Agracel.  An article by Chad Kurz of Matthews Real Estate Services describes the current state of the net lease market perfectly.

The best analogy for the current market is a traffic jam. When so many buyers and sellers stop, pause, or slow down their investment activity due to current market conditions, it causes a traffic jam for the industry. While our market continues to move, we’re seeing fewer transactions than the previous year. We anticipate this trend continuing into 2023 and anticipate fewer transactions than the previous year. How long this will last will be determined by sellers updating their expectations and the interest rate market moving forward. On a positive note, many sellers are starting to focus on the market we’re in rather than the one in the rearview mirror. If sellers continue to adjust their expectations with market conditions and interest rates can settle, the net lease market will get through this traffic in time; just not at the same transaction velocity and pricing that we saw in previous years.

Change can be difficult, and the market we’re in presents new challenges and concerns.  However, it also provides some great opportunities for owners and brokers willing to put forth the effort. To close this out, I will circle back to the traffic analogy I used to start this article. We’re in traffic and that is okay. Even in traffic, progress can and will be made.

We do feel like we are starting to see the “traffic” become lighter and rest assured we are making our way through to the open lanes.  As always, should you have any questions please do not hesitate to reach out to me.  Thank you for your continued partnership with Agracel.

Best Regards-