As new construction remains modest, a key question in the net lease market is where future deal flow will come from.

One possible source could be debt maturities. During the run-up to the 2008 crisis, CMBS was routinely used as a financing vehicle in the net lease world with buyers obtaining as high as 80% LTV loans via the CMBS market. For a number of reasons, CMBS accounts for a much smaller fraction of lending today, and even when it does, LTV's are typically no higher than 65%. Underwriting standards in general are also much tighter today.

Depending on when loans got securitized and the LTV's of those loans, refinancing could become difficult for some. In order to have built any equity in your position at all the value of the property will have needed to increase by an amount greater than the amount the loan amortized. Lots of loans done during the time in question had interest only components that deferred any principal amortization for years. Further, for higher credit deals (i.e. pharmacies) many don't have rent increases meaning that increases in value are exclusively a function of cap rate compression. Taking into consideration the fact those deals are now 10 years older, their value is likely to the flat to only marginally higher.