Single-Tenant and Net Lease Sales Activity Resetting
Single-tenant net lease (STNL) sales are offering mixed signals. On the one hand, STNL activity as a share of overall sales volume is back to normal at 22%; on the other, total volume hasn’t been this low since early 2013. Recent increases in the 10-year Treasury rate will weigh on the STNL space. Right now, investors are discounting long-term leased assets. Simultaneously, it is difficult to find leverage, though reported median cap rates for some asset classes look attractive. Cap rates still need to adjust in other cases to higher borrowing costs. The STNL segment of the market had rapid growth in capital allocations, which will take time to recalibrate.
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