Chase Bank TENANT OVERVIEW


Pros

  • Investment grade tenant
  • Emerged from recent recession as "Best in Class"
  • Ground lease - completely passive ownership
  • Regular rental increases throughout lease term
  • Generally decent size parcel of land in B+ to A locations

Cons

  • No depreciation component
  • Relatively low cap rates
  • Assumption clauses in some leases

Tenant Description

JP Morgan Chase currently sits as the largest financial institution in the United States with approximately $2.4 trillion in assets. Chase stands as one of the highest rated retail tenants commonly seen in the net lease market.

From a real estate perspective, Chase utilizes 7 different prototypes, depending on location and available site dimensions, with the bank branches ranging from 2,585 to 4,766 square feet situated on 0.65 to just over 1 acre of land. While Chase prefers to own their locations, when a new site is opened as part of a lease agreement, they will retain ownership of the improvements through the utilization of a long term unsubordinated ground lease.

Their typical lease is for a term of 20 years with four (4) renewal options at five (5) years per option. Given their high credit and class A real estate requirements, their average cap rates are near the lower range found throughout the net lease world. Typically their leases provide for rent growth, with 10% increases every five (5) years as the standard schedule. Some of the recent leases have featured a troublesome clause, allowing the lease to be assigned to any entity that meets certain financial criteria, such as minimum net worth benchmarks. While the minimum threshold set varies, the clause detracts from the implied safety of a lease guaranteed by Chase.

Originally known as Chase Manhattan Bank, it was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. It continued to be known Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000. In 2008, Chase acquired the deposits and most of the assets of Washington Mutual.

JPMorgan Chase Bank, N.A., commonly known as Chase, is a national bank that encompasses the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. It is headquartered in Chicago and is considered one of the "big four" banks in the United States. Chase Bank’s retail banking operation features just over 5,200 locations across the US with deposits of nearly $650 Billion as of June 2010.

Chase plans to expand in Florida, expanding in existing cities and entering the Gainesville and Ocala markets.

Average Cap Rate
4.30%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $4,544,117
NOI $192,160
$/Square Foot $600 - $800
Building SF 4,000 - 4,500
Lot Size 1.00 - 1.5 Acres
Lease Term 15 - 20 Year
Escalations 10% Every 5 Years
Stock Symbol JPM
Credit Rating
S&P A+
Moody's Aa3
Average Cap Rate Trend
4.56%
2015
4.52%
2016
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Chamblee, GA 4.00%
Houston, TX 4.80%