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Chase Bank NNN For Sale

Chase Bank is a part of the financial institution JPMorgan Chase, a leading financial services firm in both the United States and abroad. As of March 2023, JPMorgan Chase boasted $3.7 trillion in assets and $303 billion worth of stockholders’ equity. Measured by assets, JPMorgan Chase is the largest bank in the U.S. and the fifth-largest in the world.

As a part of this leading financial conglomerate, Chase Bank itself touts assets of over $4 trillion and is a well-recognized name throughout the continental U.S. and across the globe, too. The bank stands out as a top-tier tenant and has attracted numerous commercial real estate due to its ranking as one of the highest-rated retail tenants in the net lease market.

Tenant Overview

Chase was originally known as Chase Manhattan Bank, and it was a product of a 1955 merger between the Bank of the Manhattan Company and Chase National Bank. In 2000, Chase Manhattan Bank merged with J.P. Morgan & Company and took on its current name. The bank continues to expand, acquiring Washington Mutual’s deposits and assets in 2009.

In the U.S. alone, Chase had over 4,700 branches and over 16,000 ATMs to serve its customers. When it comes to real estate, Chase Bank tends to utilize seven different prototypes for its locations, depending on the size of the lot as well as the area it’s serving.

Chase Bank NNN Lease at a Glance
Average sale price $4,443,700
Average NOI (net operating income) $197,650 monthly
Average square feet 3,000 - 4,000
Average lot size 0.5 - 1.0 acres
Typical lease term 15 - 20 years
Escalators 10% every 5 years
Typical location Suburban locations along highly trafficked retail corridors with parking lots
Ticker symbol NYSE: JPM

Chase Bank Lease Structure

While Chase Bank typically prefers to own its properties, the company will consider a net lease situation to access top-tier properties. Its typical lease term ranges from 15 to 20 years and offers four renewal options throughout that period. Most leased Chase Bank locations employ triple-net ground leases, meaning that they can develop the property while there.

The average cap rate, or capitalization rate, for a Chase Bank net lease is 4.29%. The cap rate is a figure used to assess a real estate investment based on profitability and its return potential. Typically, cap rates around 5% are considered good – Chase’s slightly lower cap rate speaks to the company’s high credit and Class A real estate requirements.

Why Choose a Net Lease Over a Gross Lease When Investing in Commercial Real Estate?

Many commercial real estate investors prefer net leases to gross leases. These two types of leases are essentially opposites, and net leases provide numerous benefits to landlords, making for a more passive investment with a more consistent income.

First off, a gross lease states a predetermined amount that the landlord will charge the tenant to use a given space. That stated number does not change based on operating expenses, as landlords will cover operating costs under gross leases. Net leases, on the other hand, let landlords hand off operating expenses to their tenants.

There are three tiers of net leases that you will see out there: single, double, and triple. These categories are also known as N, NN, and NNN. Each level allows the landlord to pass more expenses onto the tenant, absolving themselves of increased risk as the tiers increase.

Single-net (N) leases involve the tenant paying property taxes in addition to the cost of rent, but the landlord will still be responsible for insurance, maintenance, repairs, and utilities. Single-net leases are less frequently used for commercial real estate. Double-net (NN) leases and triple-net (NNN) leases are significantly more common.

What Types of Net Leases Does Chase Bank Operate Under?

Chase typically signs triple-net ground leases with lease terms of 15 to 20 years. Throughout the term, rent escalations will occur every five years and increase the rent value by 10% each time. The combination of an absolute net lease and a ground lease makes Chase Bank an attractive option for property owners looking for true passive ownership.

NNN leases are generally the most attractive type of lease for property owners and investors. This is because they hold tenants accountable for paying operating expenses and costs related to the property, which can include insurance premiums, property taxes, and structural maintenance or repair costs. These costs can add up fast, so ensuring that the tenant is covering them can keep your revenue consistent and passive.

The ground lease aspect of Chase Bank’s leases means that the tenant can develop the property during the lease period. After the lease is over, any improvements and structures belong to the property owner.

Chase Bank likes to customize its structures, and this adds value to the property for the landlord – plus, it encourages them to stay longer since they have invested so much in site customization and build-outs.

With a triple-net ground lease like those you can expect with Chase, tenants will often pay lower base rents because they’re on the hook for operating costs. Even so, triple-net leases reduce the responsibilities related to property management by passing the majority of responsibilities onto the tenant, making them highly desirable for those looking to expand or kick off their real estate portfolios.

How to Evaluate a Chase Bank Net Lease

Regardless of which tenant you’re considering, you will want to examine property value as well as tenant strength when considering a triple-net lease. Especially when reviewing single-tenant properties, like the ones Chase Bank prefers, your tenant concentration can be only 100% or 0%. That means you’ll generate 100% of your potential cash flow or none of it.

In order to make it more likely that your Chase Bank triple-net lease pans out, you will want to ensure that the property you’re investing in meets the qualifications that Chase prefers in its locations – suburban lots along highly trafficked retail corridors with parking lots and plenty of access. That will help keep your property occupied and help you keep generating revenue.

On the plus side, NNN lease tenants like Chase Bank are normally large companies with strong balance sheets, so you can count on your payments arriving on time each month. Unlike with lower-tier tenants, you won’t be chasing down your renters to get your hands on the next check.

What Makes Chase Bank an Attractive NNN Tenant?

With a credit rating of A+ from Standard & Poor’s, JPMorgan Chase is certainly an investment-grade tenant. At the end of April 2023, the company shared its first-quarter financial results from fiscal 2023. Many of its results significantly exceeded already optimistic estimates, suggesting that JPMorgan and its subsidies (such as Chase Bank) are thriving.

Adjust earnings per share (EPS) boomed at $4.32 per share, over 25% higher than the estimated EPS of $3.41. Revenue also exceeded estimated, coming in at $39.34 billion rather than the predicted $36.19 billion. Plus, net interest income is also going up. The bank shared a key piece of guidance saying that figure will be about $81 billion this year – raising their previous forecast by about $7 billion.

All this is to say that JPMorgan Chase continues to perform well, despite the economic downturn and hints of recession in the United States and abroad. With this in mind, Chase Bank continues to be a top-tier investment grade tenant that’s an attractive option for any commercial real estate investor.