Investors were already flirting with net lease properties in the first half of the year, drawn by the lure of stable returns despite uncertainty fueled by a global trade war. The July 4 passage of the Trump administration’s signature budget package has made a relationship even more attractive.
Net lease assets pulled in billions of dollars in investment before the One Big Beautiful Bill Act became law, but activity has been supercharged in recent weeks by investment giants like BlackRock and Starwood Property Trust diving in to the tune of $10B.
Transactions, including the rollup of other massive firms, are expected to accelerate in the back half of the year.
“We needed the tax package to be passed, and then we expected folks would develop a thesis and move forward,” said Camille Renshaw, the CEO of B+E, a brokerage and marketplace focused on net-leased assets and 1031 exchanges. “And it has been frenetic, pretty much since the day after the tax package passed.”
Investors spent $46.7B in the 12 months ending in June on net-leased assets, up 37% year-over-year, according to data from CBRE and MSCI. The defensive sector is drawing capital from buyers looking for a harbor safe from the impacts of tariffs or a potential economic downturn.
“I expect it to stay that way, which is really interesting in the summer. It’s not usually that way in the summer,” she said.
BlackRock and Starwood’s deals only add fuel to the fire as investors retreat from risk. In commercial real estate investing, the assets are seen as one of the closest things to a sure bet.
The deal structure — under which tenants are typically locked into a long-term lease and responsible for all or most of the property expenses — creates what is supposed to be steady cash flow in the form of stabilized rents from tenants with strong track records and sterling credit.
In contrast to typical real estate investment, in which the upside often comes in the form of tenant rollover and rent escalations, net lease investors are effectively buying into the success of the occupier’s underlying business over the long term.
“You’re really focused on locking in your cash flow for that period of time,” said Jim Vallos, the head of direct real estate at Harbor Group International, an investment firm with $20B in assets under management. “There may be some noise in how you value the residual, but I think folks largely treat these like bonds. They’re really looking at the lease term.”
Net lease deal structures work across asset types. Retail brands will sell off the real estate they occupy to help fund new locations while office and industrial occupiers sell their real estate to unlock capital for any number of applications.
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