Bank of America TENANT OVERVIEW


Pros

  • Investment grade tenant
  • Leases afford rental increases throughout the primary term, many with annual rental increases
  • Generally well located, either as out parcel to grocery anchored shopping center

Cons

  • Retail banking industry outlook on necessity of physical locations is evolving
  • When located as a part of a shopping center, some use restrictions may apply

Tenant Description

Bank of America, (NYSE: BAC) is an American multinational banking and financial services corporation headquartered in Charlotte, North Carolina.

Bank of America did not emerge unscathed from the banking crisis and great recession but the strength of its deposits and dominance in market share along with its highly visible locations in both urban and suburban settings have helped Bank of America hold the interest of net lease investors. Generally, Bank of America sites are 1.00 - 1.5 acres with improvements of 3,500 to 4,800 square feet and are sold as unsubordinated ground leases* to net lease investors.

*In a ground lease, the investor/landlord owns the ground and the tenant constructs the building at costs of around $1.3mm and retains ownership of the building until lease termination. The tenant leases the ground from the investor/landlord and on the tenant's default or other termination of the lease; the building becomes the property of the investor/landlord. Ground leases are extremely passive investments and generally sell at 50 to 125 basis points below the average cap rate for NNN "fee simple" ownership of ground and structure transactions leased by the same tenant.

The Bank of America ground lease is attractive to investors because they typically have an initial term of 15 to 20 years with up to five (5), five (5) year renewal options. In addition, the Bank of America ground lease provides rent increases of 10-15% every five (5) years.

Bank of America Corporation is the second-largest bank in the US by assets, holding $2.187 trillion. Bank of America has a relationship with 99% of the US. Fortune 500 companies and 83% of the Fortune Global 500. The company is a member of the Federal Deposit Insurance Corporation (FDIC) and a component of both the S&P 500 Index and the Dow Jones Industrial Average.

Bank of America services clients in over 150 countries with operations based in 40 countries. It provides services ranging from investment and corporate banking to investing and equity execution services. In the United States, Bank of America serves over 47 million customers and small businesses, operates around 4,600 retail banking offices and approximately 15,900 ATMs. It also has 22 million active mobile app users.

Average Cap Rate
4.72%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $5,130,000
NOI $242,136
$/Square Foot $850 - $1,250
Building SF 4,000 - 6,000
Lot Size 1.00 Acres
Lease Term 15 - 20 Years
Escalations 10-12% Every 5 Years
Stock Symbol BAC
Credit Rating
S&P A+
Moody's A1
Average Cap Rate Trend
5.72%
2016
4.84%
2017
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Goodyear, AZ 4.75%
Mooresville, NC 5.45%
Windsor, CT 5.00%