Demand for Net Lease Investments Hold Up in CRE Spotlight
Investors busy making net lease investments range from strictly passive and “hands-off” investors to highly sophisticated privately and publicly held real estate operators who see the asset type as consistent in generating levered and un-levered yields.
NEW YORK CITY – Demand for net lease properties remains high nationwide as a range of investors marvel at the asset type for its ability to generate levered and un-levered yields in comparison to other investment vehicles, Matthew Mousavi, managing principal at SRS National Net Lease Group, tells GlobeSt.com.
Investors ranging from strictly passive and “hands-off” investors to highly sophisticated privately and publicly held real estate operators have capitalized on the investment returns from net lease investments, which are backed by a hard asset that they can actualize and visualize, making it a very tangible investment, Mousavi said.
Asset occupancy is also key to investors seeking to acquire and own retail properties. They’re looking for e-commerce resistant tenants and uses that hedge against changes within the retail landscape, such as lifestyle and fitness uses, casual dining and quick-service restaurants with drive-thru, medical and urgent care.
Compression of the 10-year treasury rate, along with the Federal Reserve’s recent lowering of the federal fund rate, has driven big growth in the net-lease space because of continuous interest rate compression that has made the levered returns that much more attractive to investors, according to Mousavi.
“Our clients are benefiting from some of the highest levered returns we’ve seen over the past 24 to 36 months,” he said. “This also causes both investors and sellers to act with urgency to capture this market while we’re within this window of opportunity.”
Due to the high demand, SRS National Net Lease Group has over $1.5 billion on the market for net lease investments across more than 35 states, with over 120 assets under contract.