Investor Appetite Strong for Net-Lease Assets

  • Strong investor demand for U.S. net-lease assets last year led to the second-highest annual transaction volume for this product type since 2001.
  • Despite rising 10-year Treasury rates and marginal softening in net-lease cap rates, spreads remain in line with long-term averages, ranging between 300 and 400 basis points.
  • Lender appetite, rising interest rates and questions regarding proposed tax reforms present headwinds for the net-lease segment. However, the overall outlook is cautiously optimistic, particularly given the considerable equity chasing yield-driven real estate in the U.S.