Net Lease REITs: 'Power 3' O, NNN, STOR Lead The Surge

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  • At this time last year, net lease REITs were going through an existential crisis. Analysts questioned the viability of the business model built on accretive acquisition-fueled growth.
  • Just as "rates up, REITs down" punished the sector in early 2018, net lease REITs have bounced back sharply as rates - and inflation expectations - have receded.
  • Since last February, the sector has surged roughly 50%, led by the upper echelon of the sector, the "Power 3" net lease REITs: Realty Income, National Retail, and Store Capital.
  • These three REITs acquired more than $4 billion of assets in 2018, a staggering figure considering the pressure from Wall Street analysts last year to scale back external growth targets.
  • The Power 3 weathered the storm in 2018 and now command the most favorable cost of capital in years, potentially reigniting AFFO growth if macroeconomic conditions can finally cooperate.

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