Industrial assets are not only the darling of commercial real estate, they are the darling of the net lease market as well. During the pandemic, many net lease REITs increased exposure to the asset class, according to panelists on the Evolution of Net Lease REITs discussion. The panel included Nafiz Linkon, VP of investments at iStar, Rob Sutton, VP of acquisitions at VEREIT; PJ Behr, VP of acquisitions at Spirit Realty Capital and Cynthia Daly, SVP and head of underwriting at Four Springs Capital Trust.

Before the pandemic, Four Springs Capital Trust focused on ecommerce or Amazon-proof properties, which included retail entertainment and dining. During the pandemic, those "ecommerce proof" assets proved not to be pandemic proof, according to Daly, who said that many of them were shut down. "We had to pivot," she said. The firm bought several Amazon distribution centers, which have done well, and it adopted a focus on medical and dialysis centers. Now, the firm is focused on industrial, retail and medical office, which Daly says they underwrite as a retail property.

Industrial distribution centers aren't the only play that Daly is making. She said that the firm can also secure retail credit by investing in an industrial product. For example, the company owns a Domino's distribution center, which makes some pre-made food items for the local restaurants. In a transaction like this, they are securing retail credit tenant in an industrial building without the unit-level risk of an individual location.