When it comes to net lease properties, buyers and sellers often focus on investment aspects such as tenant creditworthiness, lease years remaining, and rent escalations.  To be sure, these aspects are critical in the net lease arena. However, it is essential to recognize that, at the end of the day, real estate is about location, and a good location can overcome many weaknesses in fundamentals.

To illustrate this concept, below is a heat map of recently sold net lease properties in the state of Florida. The map highlights cap rates for absolute-net Dollar General stores sold since 2014, with at least fourteen years remaining on the lease. In terms of guarantor and structure, these properties are reasonably interchangeable. However, their locations are scattered across the state.

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