As new construction remains modest, a key question in the net lease market is where future deal flow will come from.

One possible source could be debt maturities. During the run-up to the 2008 crisis, CMBS was routinely used as a financing vehicle in the net lease world with buyers obtaining as high as 80% LTV loans via the CMBS market. For a number of reasons, CMBS accounts for a much smaller fraction of lending today, and even when it does, LTV’s are typically no higher than 65%. Underwriting standards in general are also much tighter today.

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