Net lease landlords beware. Economic uncertainty, margin pressures, and higher debt costs mean tenant credit bears watching, according to Spenser Allaway, a senior analyst on Green Street's research team and sector head of the Self-Storage and Net Lease sectors.
It is an about face from last year, when credit losses were near historic lows averaging around 75 basis points, compared with the long-term average of 125 basis points, Allaway writes in a recent market brief. "Yet, credit spreads in the bond market suggest above-average credit losses for the year ahead," of around 150 basis points.
To be sure, that is not a huge increase over the average, but it does point to a reversal for the net lease market used to smoother sailing.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
*May exclude premium content
Already have an account?
Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
