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The storyline remains the same for net lease properties – an excess of demand and lack of supply. As a result, cap rates continue to trade at record lows. Though there was some speculation rising interest rates would contribite to an increase in cap rates, at this point, those interest rate increases have been abosrbed. This is because even though interest rates may be rising – they still remain at historic lows compared to the previous market high in 2006. During that boom, investors were commonly dealing with interest rate vs cap rate spreads of 60 bps. Today – even with the interest rate increases – that spread stands at 200-250 bps. As a result, it still makes sense for transactions to trade at these seemingly bold low rates.

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