In the decade following “The Great Recession” net lease assets have forged their place amongst the portfolios of real estate investors. The increasing popularity of net lease assets has permitted the capitalization rates (cap rates) of these assets to remain stable, even after significant interest rate increases in recent months. Despite a 62 BPS increase in the 10-Yr Treasury Note yield since Quarter 1 2016, cap rates on single tenant net lease (STNL) properties have decreased 13 BPS over the same time period.
Investors are drawn to the long lease terms, investment grade credit tenants, and the hands off nature of management that STNL properties provide. However, the simplicity of these assets is misleading, and it is important to hire an experienced net lease broker and transaction attorney when you are considering the purchase of a triple net lease asset.