PNC Bank TENANT OVERVIEW


Pros

  • Strong corporate guarantee
  • Secure NNN ground lease structure
  • 10% + rent bumps throughout lease term
  • Well-located assets

Cons

  • Financial markets questioning strength of banking industry
  • Low asking cap rates
  • Often have high initial rents
  • No depreciation with a ground lease

Tenant Description

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.

finviz dynamic chart for  PNC
Average Cap Rate
4.95%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $7,080,000
NOI $346,797
$/Square Foot $800
Building SF 3,500 - 4,800
Lot Size 1.00 - 1.5 Acres
Lease Term 15 - 20 Years
Escalations 10 - 15% Every 5 Years
Stock Symbol PNC
Credit Rating
S&P A
Moody's A2
Average Cap Rate Trend
6.48%
2015
5.17%
2016
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Fairfax, VA 5.50%
Bensenville, IL 4.83%