Q1

2019
THE NET LEASE
BANK GROUND LEASE REPORT
BANK GROUND LEASE PROPERTIES
MARKET OVERVIEW
MEDIAN ASKING CAP RATE
Q1 2018 Q1 2019 Basis Point Cap rates for the single tenant bank ground lease sector
Tenant (Previous) (Current) Change
increased by 46 basis points to 5.30% in the first quarter of
Bank of America 4.53% 4.50% -3
2019 compared to one year ago. In the past two years, cap
Chase Bank 5.00% 5.00% 0 rates in the bank ground lease sector increased by more than
PNC Bank 4.50% 4.55% +5 65 basis points while net lease retail cap rates increased by only
8 basis points. For the purpose of this report, the bank ground
TD Bank 4.95% 5.35% +40
lease sector is comprised of both national and regional banks,
Other Banks 4.84% 5.15% +31
regardless of credit.
All Bank Ground Leases 4.63% 4.84% +21
Transaction volume for single tenant bank branches decreased
The above data reflects bank ground leases with 12 or more lease years remaining.
by more than 9% in 2018 when compared to 2017. This can be
primarily attributed to the concern among investors regarding
BANK GROUND LEASE PROPERTIES the future need of brick and mortar banking facilities. Additional
MEDIAN ASKING PRICE concerns from investors include high rents that are typically
above their current submarket levels and difficult to repurpose
Tenant Average Price buildings.
Bank of America $4,070,000 Bank branch expansion remains limited, causing the supply of
Chase Bank $4,280,000 properties to be saturated with seasoned leases. The median
PNC Bank $2,528,900 remaining lease term for bank ground leases dropped below 10
years for the first time since The Boulder Group began covering
TD Bank $6,306,000
the bank ground lease sector. The typical bank ground lease
Other Banks $3,235,400 investor prefers longer term leases which in turn has lowered
All Bank Ground Leases $3,850,000 the demand for this asset class due to the current supply of
The above data reflects bank ground leases with 12 or more lease years remaining.
shorter-term leases. Accordingly, the significant cap rate premium
historically associated with the bank ground lease sector
compressed to 97 basis points. Five years ago, the bank ground
MEDIAN ASKING CAP RATE lease sector regularly saw a 200 plus basis point premium over
BY LEASE TERM REMAINING the net lease retail sector.

Investor demand for bank ground leases will remain fragmented.

Lease Term Remaining Cap Rate
Some will be seeking assets with long term leases, strong branch
20+ 4.78%
deposits and a lease with a tier one financial institutions. While
others will be focused on residual real estate with in-place rents
15-19 5.03%
comparable to the surrounding area. However, the expectation is
10-14 5.27%
that interest in bank ground leases will remain lower than other
net lease investment classes.
Under 10 5.75%

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 Q1

2019
THE NET LEASE
BANK GROUND LEASE REPORT

SELECTED BANK GROUND LEASE SALES COMPARABLES

Sale Cap Lease Term

Date Tenant City State Price Rate Remaining

Feb-19 Wells Fargo (GL) District Heights MD $3,900,000 6.43% 9

Apr-19 TCF Bank (GL) Richfield MN $2,925,000 6.25% 9

Mar-19 Bank of America (GL) Henderson NV $2,218,000 6.00% 6

Feb-19 SunTrust (GL) Purcellville VA $7,000,000 5.50% 14

Sep-18 Bank of America (GL) Richmond TX $2,800,000 5.50% 10

Jul-18 Wells Fargo (GL) Phoenix AZ $6,225,000 5.40% 9

Jul-18 Capital One (GL) Keller TX $2,837,500 5.29% 12

Mar-19 Chase Bank (GL) Wylie TX $3,085,000 5.10% 8

Oct-18 Regions Bank (GL) Missouri City TX $2,983,690 4.77% 20

BANK GROUND LEASE VS RETAIL NET LEASE CAP RATE TRENDS

8.60%

8.10%

7.60%

7.10%

6.60%

6.10%

5.60%

5.10%

4.60%

4.10%
Q1 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018

Retail Bank

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 Q1

2019
THE NET LEASE
BANK GROUND LEASE REPORT

COMPANY COMPARISON

Total Number of Branches Credit Rating Market Cap (Billions)

Tenant
Associated Bank 230 BBB+ $3.7
Bank of America 4,600 A- $287.3
BB&T 1,800 A- $37.8
BMO Harris 600  A+ $50.5
Chase Bank 5,100 A+ $368.4
Citibank 2,649 BBB+ $161.1
Fifth Third 1,312 A- $21.2
KeyBank 1,197 BBB+ $17.0
PNC Bank 2,481 A $60.2
Regions Bank 1,899 A- $15.4
TCF Bank 425 BBB- $3.6
TD Bank 1,301 AA- $104.0
US Bank 3,067 A+ $81.9
Wells Fargo 8,050 A- $214.7

MEDIAN CLOSED BANK GROUND LEASE SECTOR VS

CAP RATE SPREAD NET LEASE SECTOR CAP RATE

Spread Q1 2018 Q1 2019
Tenant Closed Ask (bps) Tenant (Previous) (Current)

Bank Ground Leases 5.19% 4.84% 35 Bank Ground Lease Sector 4.84% 5.30%

The above data reflects bank ground leases with 12 or more lease years remaining. Retail Net Lease Market 6.10% 6.27%

Bank Ground Lease Premium (bps) +126 +97

FOR MORE INFORMATION

CONTRIBUTORS
AUTHOR Randy Blankstein | President Jimmy Goodman | Partner
John Feeney | Senior Vice President randy@bouldergroup.com jimmy@bouldergroup.com
john@bouldergroup.com
Scott Harris | Vice President Jeff Weil | Vice President
scott@bouldergroup.com jeff@bouldergroup.com

© 2019. The Boulder Group. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. We have not verified the
information and we make no guarantee, warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose
nor under any circumstances shall any of the above information be deemed legal advice or counsel. Reliance on this information is at the risk of the reader and The Boulder Group expressly
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