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Triple-net leased properties are closely hewing to 10-year Treasury note rise and fall. Will this trend continue?

For the last five years, cap rates have been compressing from an average of 7.19 percent in 2010 to a low of 6.35 percent shortly before the 2016 U.S. presidential election. This has been due primarily to falling interest rates, which reflects the historically low rates on the 10-year Treasury note. In the financial realm, the 10-year Treasury is the benchmark rate on which many assets either directly or indirectly derive their value.

Since triple-net leased properties with investment-grade, credit-rated tenants are much …

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