Why does the Buyer Pool for Net Lease Shrink When Rates Go Up?
Higher borrowing costs affecting pricing is easy to understand, but why do buyers shift away from net lease when rates rise?
Your Net Lease Property is a Bond
The features of a net leased property mimic bond investments. There are no active responsibilities, and investors receive consistent (usually monthly) cash flows.
When interest rates are low, bond returns are low, incentivizing bond buyers to consider alternative investments like net leased real estate.
When rates rise, buyers can take on less risk and earn their target return on bonds, shrinking the buyer pool for net leased assets.
What Does This Mean For NNN Properties?
If you don't plan on refinancing or selling your property in the next few years, it doesn't mean much. However, if you are intending to sell or refinance, it could mean that you will face less than premium pricing.
It may make sense to evaluate your position on where it stands today. Contact Brandon Kassab for more details at bk@nnn1031.exchange