PNC Bank TENANT OVERVIEW
Updated: October 23, 2017
- Strong corporate guarantee
- Secure NNN ground lease structure
- 10% + rent bumps throughout lease term
- Well-located assets
- Financial markets questioning strength of banking industry
- Low asking cap rates
- Often have high initial rents
- No depreciation with a ground lease
Q1 Earnings Summary
- Net income was $1.2 Billion for the first quarter compared with $2.1 Billion for the fourth quarter, which included a net benefit of $.9 Billion from federal tax legislation and significant items
- Total revenue for the first quarter was $4.1 Billion, a decrease of $149 Million, or 3 percent
PNC is a retail bank, who offers a wide range of services to its customers.
PNC Bank's solid footing and strong investment grade credit rating make it a very attractive commodity to passive investors in the NNN investment market. PNC Bank is a growing their network of bank branches, with increasingly visible locations in both urban and suburban settings. PNC sites are approximately 1.00 - 1.5 acres with improvements of 3,500 to 4,800 square feet. Many are sold as ground leases* to NNN investors.
*In a ground lease, the investor/landlord owns the ground and the tenant (typically) builds and owns the improvements. 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 ground owner. 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 PNC Bank ground leases typically have an initial term of 15 to 20 years with up to five (5) five-year renewal options. Furthermore, the PNC Bank ground lease provides rent increases of 10-15% every five (5) years. These features make the PNC ground lease a highly sought after investment opportunity.
PNC Financial Services Group, Inc. is a US-based financial services corporation. PNC operations include a regional banking franchise operating primarily in 19 states and the District of Columbia, specialized financial businesses serving companies and government entities, and leading Turnkey Asset Management Program (TAMP) and processing businesses. PNC is the sixth largest bank by deposits in the United States.
PNC provides deposit, lending, cash management and investment services to over 8 million consumer and small business customers It offers 2,500 branches, 9,000 ATM machines, and online banking.
Average Cap Rate
12 mo avg with 10+ yr lease term
Average Property & Lease
|Average Sale Price
||$1,100 - $1,300
||3,500 - 4,000
||1.00 - 1.5 Acres
||15 - 20 Years
||10 - 15% Every 5 Years
Average Cap Rate Trend
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
|Whitehouse Station, NJ
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