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REIT Access to Equity Markets Could Accelerate Acquisitions in the Coming Year
REITs are working to find a seat at the table as active buyers for commercial real estate property as the transaction market regains momentum. One sign that REITs are positioning to take advantage of buying opportunities is a recent flurry of equity raising. Five REITs went to the market with secondary offerings in February, raising a combined $1.3 billion. W. P. Carey Inc. (NYSE: WPC) raised $496.8 million Essential Properties Realty Trust, Inc. (NYSE: EPRT) raised $350 million NETSTREIT Corp. (NYSE: NTST) raised $208 million Curbline Properties Corp. (NYSE: CURB) raised $204 million Getty Realty Corp. (NYSE: GTY) raised $131 million W. P. Carey is coming off a record $2.1 billion in new acquisitions in 2025. “It's a really good market right now for us. The stability in interest rates has brought bid-ask spreads in, and sellers who have been on the sidelines for the last few years are now back into the market. So, we took advantage of that in 2025,” says CEO Jason Fox. The company is targeting primarily manufacturing and logistics facilities, as well as select retail, both in the United States and Europe. The REIT is poised for more growth in 2026 thanks to a strong balance sheet that includes roughly over $850 million in equity forwards, a credit facility of more than $2 billion that is largely undrawn, and annual free cash flow of about $300 million per year. The company has issued conservative guidance for acquisitions of between $1.25 billion and $1.75 billion, with the expectation that those numbers will be adjusted depending on how the year progresses. “Our cost of capital is as strong as it's been for quite some time. That supports accretive investment activity, and it allows us to be competitive on pricing when needed,” Fox says. “I think a lot of REITs find themselves in a similar position.” For all those reasons, REITs are likely to be more active acquirers this year. That's reflected in deal volume to date, as well as many of the guidance numbers for 2026, he adds. Across the board, it’s safe to say that REITs have been preparing for an acquisition spree. “Operationally, REITs are very much ready to handle a significant increase in number of properties, and some of that's being helped by the technology investments that companies have been making to be efficient and manage more with less,” says Matthew Werner, managing director, REIT strategies, at Chilton Capital Management. REITs also have worked to strengthen balance sheets. Many are under-levered with some of the lowest debt ratios they’ve ever had and very low levels of floating-rate debt specifically. “They have tons of capital capacity, but except for a few sectors, their cost of equity doesn’t make sense for them to go and do transactions,” Werner says. Cost of Capital Hurdles After multiple years of low transactions volume, commercial real estate transaction volume started to recover and rose 23% last year to $545.3 billion, according to MSCI. Certainly, REITs were among the group of buyers. In fact, four REITs—Welltower Inc. (NYSE: WELL), Agree Realty Corp. (NYSE: ADC), W. P. Carey, and Starwood Property Trust, Inc. (NYSE: STWD)—ranked in the top 12 for most active buyers last year based on the total number of properties acquired, according to MSCI. However, REITs as a group were noticeably less active last year. REITs accounted for 5.5% of the total transaction volume compared to 9.6% of transaction volume the prior year, and more than 10% of transaction volume in 2020 and 2021, according to JLL. The key reason for that decline is that most REITs have been trading at discounts to NAV since mid-2022, when the Federal Reserve first began its rate-hiking cycle. “A lot of REITs, through no fault of their own, have been trading at perpetual discounts to NAV,” says Steve Hentschel, senior managing director and leader of the M&A and corporate advisory platform at JLL. “It's very hard to raise new equity when it's dilutive, and without raising new equity, it's hard to be an active acquirer,” he says. Over the last few years, many publicly traded REITs have been trading at discounts to both their underlying asset values and the broader equity markets. That dynamic constrained opportunities to make new investments, and instead resulted in some take-private activity, adds Bryan Connolly, chair of DLA Piper’s U.S. real estate practice. “Looking ahead, as the underlying real estate fundamentals improve, interest rates stabilize and potentially decrease, and values in the private market continue to adjust, there should be more opportunities for growth by public REITs,” he says. Haves and Have Nots The spike in interest rates and pricing volatility that sent both buyers and sellers to the sidelines in 2023 and 2024 appears to be reversing course. The availability of debt, cost of debt, and comfort level with valuations are all improving, which is good news for commercial real estate sales activity in general. For REITs, the ability to transact is still divided into those “haves” and “have nots” in terms of NAV. The “haves” are those sectors that are trading at large premiums to NAV, notably health care, net lease retail, and data centers. Health care REITs in particular are trading at historically large premiums that are 50%, 100%, or even close to 150% above NAV in some cases. As a result, companies such as Welltower, Ventas, Inc. (NYSE: VTR), American Healthcare REIT, Inc. (NYSE: ATR) and CareTrust REIT, Inc. (NYSE: CTR) have been very acquisitive. Welltower, for example, completed $13.9 billion in new investments in the fourth quarter alone, which is larger than the total asset size of some public REITs. CareTrust invested $1.8 billion in 2025, including $562 million in fourth quarter. At REITworld last December, CareTrust President and CEO Dave Sedgwick said that with a larger team and broader platform, the “table is set” for another strong year. The REIT kicked off 2026 with the January announcement of a $142 million acquisition of six skilled nursing facilities in the Mid-Atlantic region. “We've always said, if you’ve got it, flaunt it, and we’re seeing that now from a lot of these health care REITs where they are appropriately using that cheaper cost of equity to be acquisitive in the markets they operate in,” says Daniel Ismail, co-head of strategic research, managing director, at Green Street. Health care REITs have the added benefit of finding good buying opportunities within sub-sectors, particularly in senior housing, he adds. Net lease is another sector that has been leveraging its cost of capital advantage to make accretive acquisitions. And many of the same players that were active last year expect to keep their foot on the gas. For example, Agree Realty acquired $1.45 billion in retail net lease properties last year, and the company recently increased guidance for 2026 to $1.6 billion to be deployed across its three external growth platforms. “Our pipeline to start the year is very healthy, filled with typical assets and pricing that investors would anticipate from Agree Realty,” says CEO Joey Agree. However, the REIT is watching to see how the expectation of lower interest rates this year will play out in terms of pricing, sellers, and the competitive landscape. “One important misconception is that publicly listed and private capital are chasing the same assets,” he adds. “It’s important for investors to understand the size and scope of the net lease market and appreciate the divergent strategies and execution of the many players.” Positioning for Acquisitions On the opposite side of the spectrum, a number of sectors are trading at discounts to NAV of between roughly 10% and 20%, including office, apartments, industrial, self-storage, and lodging. REITs in those sectors are still buying assets, but they are less active. “It will be hard to see them ramp up acquisition activity throughout 2026, and they likely will be highly selective in the type of deals they do,” Ismail says. Digging into individual property sectors, there are multiple examples of companies that have done a lot of hard work to put themselves in better positions for the acquisitions to “turn back on,” Werner adds. “The market is paying attention to that and rewarding these companies,” he says. FrontView REIT, Inc. (NYSE: FVR), for example, was able to source a convertible preferred investment and now has the opportunity to prove their acquisition strategy. As a result, their share price is on a path toward being able to issue common equity again, and the company will be able to continue acquisitions after they use the cash from the convertible preferred issuance, Werner notes. REITs also have another lever to pull that could give them an edge in acquisitions—the ability to utilize the tax advantages of the REIT structure to allow private operators to sell their assets to REITs. Instead of a cash sale, an owner could consider an UPREIT, which would allow them to transfer their basis into operating partnership (OP) units. There have been one or two examples of that in strip centers, which has been experiencing good fundamentals. “So, we could see a few more of those as the year goes on,” Ismail says. Outlook for M&A Activity In addition to property sales, the environment could be more conducive for M&A deals this year, both in public-to-public and take-private deals. One recent announcement was the acquisition of Veris Residential, Inc. (NYSE: VRE) by a group led by Affinius Capital for $3.4 billion in cash. “If the math doesn't work for a REIT to go buy something on the private market, why not buy a public peer with an exchange,” Werner says. “I think the sector is ripe for that, but I do think that it's also ripe for take-privates because the debt markets are very open.” Many of the M&A deals that have occurred in the last year were take-privates that involved deals below $3 billion. Some of those transactions are getting done in “chunks” with perhaps one buyer acquiring a large portion of the portfolio, with other assets or smaller portions being sold off separately, Hentschel notes. For example, Aimco is reportedly sold seven of its Chicago-area properties to an investment group for $455 million as part of its liquidation. Buying Opportunities Ahead REITs could find more buying opportunities ahead in a market where transaction volume is rising and the bid-ask pricing gap between buyers and sellers is narrowing. Although transaction markets have not been entirely frozen, the inventory of for-sale properties has been thin, with more sellers that have opted to hold onto properties and wait out market volatility. “There was plenty of liquidity, but there was a bid-ask gap between buyers and sellers, and now that gap is closing, and more product is coming to market,” Hentschel says. In its 2025 Year-End Real Estate Trends Report, DLA Piper is predicting that U.S. commercial real estate transaction volume will increase by another 15% to 20% this year. “We expect REITs will be most active in sectors perceived to benefit from multi-year tailwinds such as health care and housing-related assets, including senior housing and multifamily properties,” Connolly says. Data centers are likely to continue to command interest, as well as manufacturing and logistics due to supply chain challenges, continued expansion of e-commerce, and on-shoring. “Public REITs have been challenged by the gap between how the public market values their stock and how the private market values the underlying real estate,” Connolly points out. “However, as private market values continue to adjust to the new reality, this headwind should diminish.”
MIPIM 2026: Where Capital, Conviction and Opportunity Converge
As the industry gathers once again in Cannes for MIPIM 2026, the European real estate investment landscape appears to be at an important inflection point. After several years defined by volatility, repricing and constrained liquidity, there are growing signs of stabilisation — though the recovery remains uneven and market-specific. Against that backdrop, three questions are likely to dominate conversations at MIPIM this year: Are European transaction volumes expected to improve? How will the sale‑leaseback market evolve amid a significant wall of maturing debt? Which sectors appear best positioned as investors recalibrate their strategies? The Outlook for European Transaction Volumes Pricing expectations between buyers and sellers have adjusted meaningfully over the past 18–24 months, following one of the sharpest repricing cycles the European real estate market has experienced in decades. After a prolonged period of stalled activity, valuations across many markets now show clear signs of stabilisation, supported by greater transparency around interest‑rate policy and financing costs. While long‑term rates remain elevated relative to the pre‑2022 environment, the pace of change has slowed, allowing investors to underwrite returns with greater confidence and begin re‑engaging selectively with the market. This improved clarity around cost of capital is starting to translate into renewed deal momentum in several core European markets. Savills reports that European investment volumes are expected to rise by around 18% in 2026 as pricing firms up, macroeconomic conditions stabilise and institutional capital returns more consistently across the main sectors. That said, recovery is unlikely to be uniform. We continue to see divergence between markets and sectors, with liquidity gravitating toward assets where fundamentals are strongest and underwriting assumptions can be supported over the long term. Sale‑leasebacks and the Growing Need for Capital One of the most prominent themes we expect to discuss at MIPIM 2026 is the growing demand for alternative sources of capital — particularly as a significant amount of corporate and real estate debt comes due this year and next. Across Europe, many owner-occupiers are facing refinancing challenges in an environment where traditional bank lending remains selective and difficult to access. At the same time, businesses are contending with higher operating costs, investment requirements linked to competitiveness, and the need to preserve balance‑sheet flexibility. In this context, sale‑leasebacks are increasingly being viewed as a strategic financing tool. By unlocking capital tied up in real estate, owner-occupiers can redeploy funds toward growth initiatives, operational requirements and debt paydown, while retaining long‑term operational control of their assets. Sectors to Watch: Industrial and Retail When it comes to sector preferences, industrial and retail assets continue to stand out, provided they are underpinned by strong occupier fundamentals. In the industrial space, manufacturing and logistics assets that play a critical role in supply chains remain attractive. Structural trends such as nearshoring, supply‑chain resilience and e‑commerce continue to support demand in many European markets. Assets that are modern, well‑located and tailored to tenant needs are increasingly difficult to replace, reinforcing their long‑term importance. Retail also remains an area of opportunity — particularly for formats that serve non‑discretionary or value‑oriented consumer demand. Grocery‑anchored retail, DIY, and other essential retail categories have demonstrated resilience through economic cycles, supported by consistent foot traffic and defensive spending patterns. A Measured but Constructive Outlook MIPIM 2026 comes at a time when optimism is returning to European real estate markets. While challenges remain, there is growing evidence that capital is being deployed at more significant levels — particularly where opportunities are grounded in fundamentals rather than short-term trends. The conversations in Cannes this year are likely to reflect that balance: pragmatic, selective, but increasingly forward‑looking. For long‑term investors focused on durable cash flows and partnership‑driven transactions, the environment continues to present compelling opportunities.
Forging Long-term Partnerships Through Tenant-centered Real Estate Solutions
At W. P. Carey, we view real estate as a long‑term partnership — not a one‑time transaction. We stay closely connected with our tenants, aligning our capital and real estate expertise with the evolving needs of their businesses. That philosophy is embedded in Carey Tenant Solutions, our platform designed to support tenant growth beyond the initial acquisition. Through follow‑on investments, we help tenants modernize, expand, redevelop, relocate and improve the energy efficiency of their facilities — allowing them to focus capital on what matters most: running and scaling their core business. Below is an overview of the core capabilities within Carey Tenant Solutions and how each can benefit existing and prospective tenants. Build-to-suits In a build‑to‑suit, W. P. Carey funds and manages the construction of a new facility — or the expansion of an existing one — tailored to the precise specifications of a prospective or existing tenant. Upon completion, the tenant enters into a long‑term net lease while retaining full operational control of the new or expanded facility. We offer two flexible approaches to build‑to‑suits: Build-to-suit financing: We provide construction capital while the tenant’s developer executes the project, either through traditional construction financing funded over time or via take‑out financing upon completion. Turnkey build-to-suit: We finance and manage the entire construction process, from site selection to final delivery. For tenants, the primary advantage of a build‑to‑suit is capital efficiency. Rather than tying up their capital in real estate, tenants can redeploy resources toward growth initiatives, innovation or strengthening operations — while still gaining a facility designed specifically for their needs. Learn how this approach helped support our tenant Cuisine Solutions’ growth. Redevelopments W. P. Carey offers comprehensive redevelopment capabilities, managing projects from initial design through delivery. Combining our internal development expertise and long‑standing relationships with leading architects, consultants and contractors, we assemble experienced teams capable of executing even the most complex redevelopment projects. Our redevelopment capabilities span: Repositionings, where we upgrade, modernize or expand an existing building while maintaining its core use. Redevelopments, which involve unlocking value of infill locations through adaptive reuse and ground up construction of state-of-the-art, primarily industrial, properties that meet the demands of modern occupiers. W. P. Carey’s turnkey redevelopment process is comprehensive and includes: Pre-construction planning and optimization Development feasibility and due diligence Zoning and entitlement approvals Design and permitting Budgeting and scheduling Construction management Creative lease structures Sustainable development Overall efficiency Our proactive approach allows us to work directly with incoming tenants to shape a property around their exact operational requirements, while enhancing the quality of our portfolio by retaining the best positioned assets in the highest barrier-to-entry locations. Learn more about our carbon-neutral redevelopment of a Class-A warehouse for a global IT services company. Energy Solutions Through Carey Tenant Solutions, we also help tenants reduce operating costs and advance their sustainability goals by designing, funding and implementing renewable power and energy efficiency projects directly at their facilities. We believe that improving the quality and sustainability of our assets delivers tangible benefits across our portfolio — increasing renewal probabilities, strengthening tenant relationships and enhancing long‑term asset value – all while helping our tenants reduce their carbon footprint. Our energy solutions include: On‑site renewables, including CareySolar® Efficiency retrofits, such as LED lighting upgrades Smart building technologies, including IoT‑enabled metering Green infrastructure, such as EV charging stations and battery storage Carbon‑neutral construction By integrating these solutions into our long‑term ownership strategy, we help tenants operate more efficiently today while building assets that are better positioned for the future. Read how we collaborated with our tenant, a healthcare products distributor, to fund a rooftop solar installation. A Platform Built on Partnership Collaboration with our tenants — and support beyond the initial transaction — has always been core to how we operate at W. P. Carey. With Carey Tenant Solutions, we have formalized and unified those capabilities, bringing decades of experience together under a single platform to deliver one of the most comprehensive tenant service offerings in the net lease industry. Interested in exploring Carey Tenant Solutions? Get in touch today.
Project Management Teams Deliver Big Value for Tenants
There’s no question that the current real estate development market is challenging. Labor shortages and rising material costs are creating hurdles in the construction industry, which is being compounded by limited inventory of vacant real estate for certain property types, leaving companies with very few options for additional square footage or property upgrades. The good news is that companies that lease their building may be in luck thanks to a high-value service some landlords are offering: a dedicated project management team. Project management teams come in all shapes and sizes, but they have the potential to handle all types of development projects (e.g., expansions, renovations and build-to-suits) as well as deliver turnkey solutions. REITs and other longer-term investors will often invest in these teams, priding themselves on being a partner to their tenants for the duration of the lease and beyond. Project management teams manage everything from conceptual planning to design to construction management, assembling a team of architects, consultants and contractors. This holistic service is particularly valuable since most tenants don’t have the resources—be it the capital, relationships or expertise—to execute these projects themselves. And leveraging their landlord’s project management team is often more efficient and cost-effective than hiring a third-party developer, and enables them to focus on their core business, which is most likely not real estate development. In today’s market, having access to a dedicated project management team with a shared interest in their tenant’s business and the expertise to effectively navigate current challenges is more valuable than ever. Here’s why: Renovate, modernize or convert an existing building Project management teams can adapt an existing building to reflect the tenant’s evolving real estate needs. This could encompass a full renovation and modernization of an outdated building or converting one property type to another (e.g., office to R&D) to reflect a changing business model. Moreover, with prices continuing to increase having a project management partner that can finance the upfront costs associated with these projects is critical. In addition, working with a project management team that understands the ins and outs of a tenant’s business along with being able to offer a tailored approach means the final product will be ideally suited to the tenant’s long-term needs, in comparison to if the tenant worked with a third-party developer. Expand an asset to accommodate a need for more space In order to continue growing, many tenants need to expand their real estate footprint to make room for more equipment, inventory and more. However, record-low availability of real estate means that many tenants can’t find the additional space they need. An in-house project management team can help by working with tenants to expand their existing space to accommodate growing business needs. A huge benefit of this approach is that tenants can typically continue operating in their existing facilities during an expansion, offering minimal disruption to day-to-day operations. Retrofit an existing space to make it more sustainable With energy costs continuing to soar, there’s never been a better time for tenants to update their properties to make them more sustainable. In-house project management teams can work on a variety of sustainability projects including renewable energy opportunities – such as solar panel installations – energy efficiency retrofits and green building certifications. These sustainable projects can reduce tenants operating costs and help reduce scope 1 and 2 emissions to align with their sustainability goals. Conclusion For landlords, investing in a project management team is a win-win. Turnkey project management solutions add value for tenants by adapting their property to meet their long-term needs, helping increase lease renewals while also improving the overall quality of the portfolio. From an investment perspective, having a project management team also provides a steady pipeline of attractive internal investment opportunities, while enabling the landlord to have project oversight on deals where they are also serving as the capital provider.
2026 Net Lease Outlook
After several years marked by inflation, interest rate uncertainty and selective buyer activity, the U.S. net lease market enters 2026 with more clarity – and more momentum. As pricing resets work through the real estate sector and investors gain confidence in the direction of capital markets, we expect an increase in transaction volume in the year ahead. Below are three predictions set to shape the U.S. net lease landscape in 2026. Transaction Volume Will Rebound as Pricing Stabilizes The reset in valuations throughout 2024 and 2025 has narrowed bid‑ask spreads and revived buyer activity. As the sector digested Fed policy shifts and debt markets steadied, transaction activity began increasing meaningfully – particularly in industrial and logistics. As a result, we expect a measurable uptick in volume in 2026 as investors lean into improved cost‑of‑capital visibility. Colliers forecasts that U.S. CRE transaction volume will grow 15–20% in 2026. Industrial Will Continue to Dominate Industrial demand is positioned to remain strong in 2026. As trade‑policy uncertainty eased in late 2025, many companies who had paused expansion or relocation decisions finally moved forward, bringing a wave of leasing activity that is carrying into the new year. E‑commerce also continues to be a powerful structural driver, underpinning robust leasing demand as retailers and logistics operators expand fulfillment capacity to meet consumer needs. At the same time, development pipelines have slowed, allowing the market to work through new supply. As a result, vacancy is expected to stabilize in 2026, reinforcing a fundamentally balanced environment for investors and occupiers alike. Rising M&A Activity Will Drive New Sale‑Leaseback Opportunities An anticipated rise in M&A activity will likely fuel an increase in sale‑leaseback opportunities in 2026. Private equity firms often use sale-leasebacks to reduce upfront equity requirements and enhance returns when acquiring a new business, especially in deals where real estate represents a meaningful share of the purchase price. On the post-acquisition side, sale-leasebacks can offer PE firms considerable financial flexibility, supporting reinvestment into the portfolio company’s business or even future follow-on acquisitions. Altogether, the anticipated surge in M&A is expected to expand the pipeline of high‑quality real estate coming to market, providing ample opportunity for sale-leaseback investors. Final Thoughts As 2026 unfolds, the U.S. net lease market is entering a period of renewed stability and opportunity. With transaction volumes rebounding, industrial demand holding firm and sale-leaseback activity accelerating alongside M&A trends, investors have multiple avenues to deploy capital strategically. Staying attuned to these drivers will be essential for navigating the year ahead.
Sale-leaseback Activity Expected to Grow as Capital Conditions Improve in 2026
After a slow start, sale-leaseback activity saw a resurgence in the second half of 2025. Early in the year, activity was dampened by uncertain fundamentals and macroeconomic headwinds, but momentum returned as market conditions stabilized. “It was a year of growth, particularly for industrial middle-market sale-leasebacks, which are a large part of W. P. Carey’s business,” says Tyler Swann, managing director, investments, at W. P. Carey. With interest rates stabilizing and companies continuing to explore innovative ways to raise capital, sale-leaseback activity is expected to remain strong in the new year. Falling Rates Support a Strong Outlook For many businesses, changing capital conditions play a major role in decision-making. Swann notes that long-term rates, which directly impact sale-leaseback pricing, have been trending downward. He explains that the 10-year US Treasury rate started the year in the mid to high fours, before settling around 4%, improving the cost of capital and creating stronger incentives for companies to act. “Lower cost of debt and equity enabled us to offer lower cap rates to potential tenants,” says Swann. He adds that when interest rates decline, companies often feel more comfortable making longer-term capital commitments, including sale-leasebacks with 10-, 15- or 20-year terms. Improved Trade Clarity Continues to Strengthen Activity Uncertainty around trade policy has created pockets of hesitation among many companies as they weigh their decisions. “Some people didn’t want to make long-term commitments to facilities, not knowing exactly what the trade policy was going to look like,” says Swann. “However, the threat of tariffs has begun to temper and, as a result, activity is getting stronger.” He notes that trade uncertainty has also pushed some companies to double down on their commitments to domestic supply chains. Swann adds that industrial vacancy remains low in many markets and rental rates have generally held steady or increased, reinforcing investors’ appetite to acquire these types of assets through sale-leasebacks. Improving Capital Conditions Create a Tailwind for 2026 With long-term rates stabilizing or slightly declining over the past year, Swann expects these shifts to remain a positive influence on sale-leasebacks. “I anticipate this stability to be a tailwind for investment activity for the same reason it was in 2025,” he says. He also points to merger and acquisition activity as another area to watch. Swann believes a pickup in private equity transactions could further boost sale-leaseback volume in the coming year. As interest rates continue to inch lower, he notes that activity may resemble more active periods of previous cycles, setting the stage for a strong 2026.
From Volatility to Resilience: Net Lease Real Estate in 2025
2025 marked a turning point for the net lease real estate market, driven by three defining trends: interest rate relief, cap rate stabilization and an increased focus on mission-critical assets. Together, these forces shaped real estate investor strategies and helped restore confidence in the market. Here’s an overview of each: Interest Rate Relief Sparked Market Activity The Federal Reserve’s late-2024 rate cuts reignited momentum across the market. Lower borrowing costs helped narrow the bid-ask spread, unlocking deal flow that had stalled during the Fed’s tightening cycle. Transaction volumes rebounded as investors who had been sidelined re-entered the market, eager to capitalize on improved financing conditions. For the year ending in Q3 2025, net lease investment volume increased by 24% to $48.1 billion from the same period a year ago. This shift underscored how quickly sentiment can turn when capital becomes more accessible. Cap Rates Found Their Balance After two years of steady increases, cap rates showed signs of stabilization, with Q2 and Q3 data indicating only marginal movements. This plateau suggests the market is entering a more predictable phase – due to factors such as declining Treasury yields, steady inventory and consistent demand – and creates opportunities for disciplined investors to lock in attractive yields. High-credit tenants continued to command premium pricing, underscoring the importance of credit quality in underwriting decisions. Mission-Critical Assets Took Center Stage Another notable trend in 2025 was the surge in demand for mission-critical properties. While these assets have long been foundational to the net lease market, investor interest increased as buyers prioritized operationally essential facilities with high tenant stickiness and limited relocation risk. As a result, investors gravitated toward property types such as specialized manufacturing, data centers and healthcare facilities. These types of mission-critical properties typically offer long-term stability and predictable cash flows given the tenant is likely to operate out of them for the long term, making them attractive in a volatile environment. Looking Ahead 2025 represented a much needed rebound for the net lease market. Interest rate cuts and cap rate stabilization restored confidence, reignited deal flow and brought investors back into play. While macroeconomic headwinds haven’t disappeared, the sector enters 2026 on solid footing and poised for continued growth.
Turning Real Estate into Opportunity: How Sale-leasebacks Fuel Business Growth
In today’s ever-changing macroeconomic landscape, companies are rethinking how they fund growth, maintain liquidity and improve balance sheet strength. One strategy that savvy companies are using is the sale-leaseback – a transaction where a business sells its real estate to an investor for cash and then leases it back on a long-term basis. This allows companies to convert an illiquid asset into working capital while maintaining operational control of their property. Below are three strategic ways businesses are using sale-leaseback proceeds to fuel growth. 1. Recapitalization and Paying Down Debt Many organizations use sale-leaseback capital to strengthen their financial foundation. By monetizing owned real estate, a company can retire or restructure high-interest debt, improve leverage ratios and enhance liquidity. This can result in better credit metrics and greater flexibility when seeking additional financing or investment. For private equity-backed firms, recapitalization through a sale-leaseback can also help unlock trapped equity without diluting ownership or taking on new debt. 2. Investing in Equipment, Automation and Sustainability Freeing up capital from real estate can enable major investments in operational improvements. Companies are using sale-leaseback proceeds to modernize production lines, invest in robotics and automation and upgrade facilities to meet sustainability goals. This might include installing solar panels, LED lighting or EV charging infrastructure – all upgrades that improve efficiency and help save on energy costs. These investments can increase profitability over time, create competitive advantages and satisfy corporate stakeholders focused on sustainability. 3. Funding Strategic Acquisitions and M&A Capital from a sale-leaseback can also serve as a catalyst for expansion. Businesses pursuing mergers, acquisitions or strategic partnerships often need significant capital quickly. Sale-leaseback transactions can help fund buyouts, target company integration or geographic expansion – without the delays or covenants associated with traditional debt financing. Because sale-leaseback proceeds are based on the value of owned property, companies can generate substantial, non-dilutive capital that supports growth. Conclusion A well-structured sale-leaseback can serve as a dynamic financial tool – offering immediate liquidity without the restrictions of other forms of traditional financing. For companies looking to recapitalize, innovate or grow through new acquisitions, this strategy offers a proven path to access capital efficiently in all market environments. Interested in pursuing a sale-leaseback? Contact W. P. Carey today!
Is a Sale-leaseback Right for Your Business?
Economic uncertainty and restricted debt markets are leading more corporate occupiers to explore alternative financing options such as sale-leasebacks to secure funds. In a sale-leaseback, a company sells its real estate to an investor for cash and simultaneously enters into a long-term lease thereby unlocking otherwise illiquid capital to redeploy into higher growth segments of its core business. A sale-leaseback is an innovative tool that can be especially advantageous in today’s market where debt financing may be less attractive but is your company and your real estate the right fit? Read on to determine if (and when) a sale-leaseback is right for your business. The Criteria for a Sale-leaseback Own your real estate The key criterion for a sale-leaseback is real estate ownership. One of the primary drivers for a company to undertake a sale-leaseback is to unlock 100% of the real estate’s value while maintaining long-term operational control of the asset. By selling your property and leasing it back, you remove a non-incoming producing, fixed asset (real estate) and unlock liquid capital to reinvest into your business. Own the right type of real estate While the mainstream commercial property sectors of industrial, retail and office are most common in a sale-leaseback transaction, other specialty assets like life sciences and data centers have expanded the pool of investable assets. Make sure it's critical to your operations Investors look for specific value-add characteristics before buying a property. For instance, it’s best if your asset is mission-critical—in other words, an essential revenue driver for your business. Potential investors will also likely consider the property’s condition and age (high-quality, modern assets with sustainable features will be more valuable), location (think proximity to transportation routes) and size. Desired size will depend on the investor and often vary by property type. Retail properties for example tend to be smaller (perhaps around 20,000 square feet), compared to an industrial asset that might be upwards of 250,000 square feet. Additional space to expand the facility is also a plus for investors. However, the criticality of the asset to your operations is often more important than the asset type or size itself. Have a strong underlying credit story (sub-IG credits welcome!) You’ll attract real estate investors if you have a strong underlying credit and revenue history. Due to the long length of leases typically associated with sale-leasebacks, the investor will want to be confident that you can consistently pay rent throughout the lease term. However, this doesn’t mean your company must be investment grade. Many investors can work with sellers that are sub-investment grade so long as the underlying fundamentals of the business are solid. Institutional investors with strong underwriting capabilities will be able to evaluate all credits and assess your financial statements in order to get comfortable with pursuing a sale-leaseback deal. Be willing to sign a long-term lease, but ask the right questions upfront The last criterion for a sale-leaseback is that you must be willing to sign a long-term lease with the investor, typically 10-30 years. Before signing a long-term lease, it’s important to consider some critical factors, including: Space requirements: Evaluate your current and future space requirements to ensure the leased property will accommodate your needs for the duration of the lease. If additional space is needed, it’s possible your sale-leaseback partner will work with you on an expansion or build-to-suit of a brand-new asset. Renewal options: Does the lease come with renewal options? Find out the renewal terms for which the lessor is willing to extend the lease period so that you can continue occupying the property once the initial period for the lease expires. Maintenance and repairs: Know who's responsible for any maintenance and repair needs of the leased commercial property. In a triple-net lease, for instance, the tenant is responsible for all insurance, taxes and maintenance expenses, which also means the tenant maintains full operational control. By considering all the above factors, you can make an informed decision and confidently enter into a long-term lease. When to Consider a Sale-leaseback? While sale-leaseback financing is an excellent alternative to loans and other debt financing, it's not ideal for every company in every circumstance. Here are a few examples of when it makes sense to consider a sale-leaseback for your business. When you need capital for growth Sale-leasebacks are an excellent tool to unlock cash for growth initiatives, particularly for companies with limited access to traditional forms of financing. Proceeds from sale-leasebacks can be channeled to investments in new equipment, technology, personnel or additional facilities. And the best part is that a sale-leaseback enables you to raise capital without losing control of your property. To support M&A If you're considering an M&A transaction, you may need to raise additional capital to fund the purchase of the target company—or to pay down debt following an acquisition—which may be the case for companies and private equity firms alike. Usually, the cost of capital for commercial real estate investors is quite competitive as a real estate investor will acquire your property at market rate, creating an immediate arbitrage between the real estate multiple and the acquired business EBITDA multiple. To strengthen your balance sheet A sale-leaseback can help strengthen your business’ balance sheet by shoring up much-needed cash. You can use the raised capital to pay off existing debt, boost your debt-to-equity ratio or invest in other revenue-driving areas of your business. Remember the composition of your business’ balance sheet determines how lenders, investors and shareholders view your company's risk profile. If you have less debt, your business will be more attractive to these parties. Final thoughts A sale-leaseback transaction is an excellent alternative for companies, especially during periods when traditional sources of financing are limited. When choosing a sale-leaseback partner, consider an experienced, long-term investor who can buy on an all-equity basis and who is willing to work with you throughout your lease (and beyond). W. P. Carey has been a leader in sale-leasebacks since 1973 and is well-positioned to continue helping companies unlock capital even in today’s challenging economic environment. Maximize your real estate and unlock immediate capital by contacting our team today!