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Over the past several weeks, net lease investors have been trying to quantify the impact that the COVID-19 pandemic will have not only on the terms of long-term financing, but their ability to secure debt altogether. The rapid nature at which this black swan event unfolded has created confusion as to what is still achievable, as well as what the landscape will look like in the next few months.  Pre-COVID, many borrowers felt comfortable with existing lending relationships and the ability to secure competitive debt, and when pricing competitive loan terms out, often the spread between 3 to 5 lenders was less than 10bps on interest rate. Given what has occurred over the past 6 weeks, we’ve been reminded of the need and value to broadly price debt, as loan term sheets for identical assets are coming back varying 50 to 100bps on interest rate, as well as seeing material changes in amortization schedules and recourse requirements.  In order to analyze this correctly, it is important to understand what types of lenders are active in the net lease space. They are as follows:

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