Understanding Net Leases in Commercial Real Estate

Net lease assets are attracting more institutional capital. New Mountain Capital’s Teddy Kaplan and CBRE’s Will Pike explore why this resilient, tax-efficient investment strategy is gaining favor.

• Attractive in volatile markets: Positioned as a hybrid asset class—part real estate and part structured finance, net lease investments offer cash flow backed by quality credit tenants.
• Manufacturing momentum: Production facilities are emerging as high-performing assets due to their strong cash flow and tenant investment in infrastructure.
• Sale-leasebacks as strategic tools: Investors and corporate occupiers are increasingly using sale-leasebacks to unlock capital, especially in sectors where considerable capital is tied up in operating assets.

·      Capital market resilience: Despite macroeconomic headwinds, net lease is attracting institutional capital, with growing interest from large institutions and wealth management channels.

·      Risk-adjusted returns and geographic nuance: Cap rates and valuations vary significantly by location and tenant credit quality, underscoring the importance of underwriting both real estate fundamentals and corporate financial health.