Net lease will continue to command investor interest heading into 2023 – but inflation will prompt debt-seeking investors to shift their focus to higher cap rate deals to avoid negative leverage, according to one industry insider.

"Higher cap rates typically mean deals that may be more credit-challenged and/or with shorter lease terms, but fortunately lenders are very liquid and hungry to get the right deals done, so with some creativity, we continue getting to closing tables with deals that make sense," says Miguel Jauregui of SAB Capital. "Lenders today are looking at net lease characteristics that were more overlooked in a heated market are now discussion points, such as population density and how strong the real estate is. It's no longer as easy as well it's a Walgreens so equal terms across the board no matter where it is."

Jauregui says the experience and liquidity of the sponsor is more important than ever before as well, noting that "just because it's an A-credit doesn't mean any tenant is bullet proof."