Bank of America

Net Lease Advisor Overview

While Bank of America has experienced its share of hardships resulting from the recent bank crisis and recessions of the last quarter century, they are still counted amongst the corporations too big to fail. Given their industry dominance and deposit volume strength, coupled by the sheer amount of locations across the country, it is still clear that net lease investing with Bank of America has not decreased.

On average, you’ll find 1 to 1 1/2 acre, well maintained lots with roughly 3500 to 4800 sq. ft. These are usually sold as NNN investments in the form of unsubordinated ground leasing and considered passive investments, selling well below typical capitalization rates for transactions based in fee simple NNN ownership. Typically anywhere from 50 to 125 basis points below average.

Bank of America

Note that the tenants at each branch will normally own the buildings during the life of the lease, and they may also incur initial building costs. The landlord or investing entity usually owns the ground itself (as part of the ground leasing arrangement). However, property ownership will revert back to the investor or landlord upon default or lease termination.

With rental escalations ranging between ten and fifteen percent every 5 years, ground leasing remains desirable for investing due to standard 15-20 year structuring with up to 5 separate 5 year renewals that can be utilized.

Pros

  • Most properties are leased in fee simple allowing depreciation, typical bank ground leases don’t
  • Excellent locations tied with malls and shopping areas
  • Affordable rent increase during life of primary lease with annual bumps
  • Tenants are considered graded for investors

Cons

  • Variations in bank industry requirements for actual bricks and mortar buildings
  • Regulations and restrictions often apply to locations connected with shopping malls

Tenant Description

Serving customers across 150 countries, the Bank of America operates in roughly 40 of them. Officially known as Bank of America Corporation (NYSE: BAC), they are a multi-national financial corporation with headquarters stationed in Charlotte, NC. As one of the largest entities within the S&P 500 and Dow Jones stock exchanges, they are the 2nd biggest holding company rated by assets in the U.S.

Also known as B.O.A. for short, their banking services are continuously provisioned for both corporate and investment bankers around the globe. This includes many forms of equity execution and investor services that add a high level of desirability and accessibility for clients.

With direct relationships spanning ninety nine percent of all United States Fortune 500’s, they also network with eighty three percent of all Fortune Global 500’s. Add to this their federal membership with the FDIC (Federal Deposit Insurance Corp.).

In the U.S. alone, the Bank of America services a staggering fifty seven million customers, operating approximately 5700 retail office buildings with well over 17,000 ATMs. Current estimates show around thirty million active online banking users who frequent their platforms.