Private capital is rapidly emerging as a powerful source of liquidity for large public net-lease real estate investment trusts, reshaping how these companies fund growth and optimise their balance sheets.
Traditionally dependent on public equity and unsecured debt markets, net-lease real estate investment trusts (REITs) are increasingly turning to institutional partners, sovereign wealth funds and private equity and credit firms to access flexible, scalable capital—often on more attractive terms, according to Todd Stender, managing director at LNL Capital, an alternative lender focused on the net-lease sector.
At the core of this shift is a convergence of interests, he says. “The stock market has been unpredictable over the past few years, and net-lease REITs have found it challenging to reliably access public equity. By entering into joint venture (JV) with stable, long-term capital partners, they can insulate their equity from market volatility,” Stender explains.
At the same time, large pools of private capital are seeking stable, long-duration income streams to match liabilities—particularly in a higher interest rate environment where predictability comes at a premium. Net-lease real estate, characterised by long-term leases and built-in rent escalations, fits this mandate well.
As a result, partnerships between public REITs and private capital providers have accelerated, often taking the form of joint ventures. Notable examples include Realty Income’s $1bn JV with Apollo to acquire retail properties; Prologis’ $1.6bn JV with Singapore’s GIC to develop and own build-to-suit industrial assets in the US; and, in Europe, Supermarket Income REIT’s partnership with a Blue Owl Capital-managed fund.
Stender says these JV structures allow net-lease REITs to pursue large-scale acquisitions without overburdening their balance sheets. By recycling capital through asset sales into JVs, REITs can continue to grow even when public funding is constrained. Typically, the REIT acts as the operating partner—sourcing deals, managing assets, and earning fees—while the institutional partner provides the majority of the capital.
These deals signal a broader transformation in how public companies approach capital sourcing and balance sheet strategy. “Joint ventures enable net lease REITs to diversify away from public markets. By selling partial interests in their portfolios while retaining an equity stake, they not only unlock capital but also generate management fees and diversify their revenue streams,” Stender says.
With a significant amount of private capital looking for a home, he believes that the recent joint ventures have further validated the net-lease asset class in the eyes of investors. “The reputational benefits alone are likely to ripple across the industry and spark further deal activity,” he says.
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