Triple net lease (NNN) properties continue to attract investors for their stable cash flow, passive management, and long-term lease structures. In 2025, however, financing these assets requires more creativity and discipline than in prior years. Elevated interest rates, selective underwriting, and tighter capital markets have shifted the way investors approach deal structures.

The financing choices investors make today directly affect yield, risk profile, and overall portfolio performance. Understanding both traditional and alternative strategies is critical to generating value in the current market.

Disclaimer: This article is informational only and does not constitute financial advice. Investors should consult lenders, brokers, and advisors before making financing decisions.

Traditional financing structures for NNN properties

Conventional bank loans

Commercial banks remain a go-to option for many NNN investors. Banks typically offer fixed or floating-rate loans with conservative loan-to-value (LTV) ratios. While interest rates in 2025 are still elevated compared to the 2010s, strong borrowers with long-term leases can often secure rates in the mid-6% range.

Pros: Banks often offer the lowest borrowing costs for well-qualified deals and borrowers.
Cons: Underwriting has tightened. Shorter lease terms, non-credit tenants, or properties in secondary markets may not qualify.

CMBS (Commercial Mortgage-Backed Securities)

CMBS financing is suited to properties with long-term, creditworthy tenants. These loans are attractive for investors seeking non-recourse debt and longer amortization schedules.

Pros: Competitive fixed rates, non-recourse structure, and high leverage potential.
Cons: CMBS loans are inflexible, with prepayment penalties and limited ability to renegotiate. Borrowers give up optionality in exchange for long-term stability.

Life company loans

Life insurance companies continue to finance prime NNN assets leased to investment-grade tenants.

Pros: Attractive fixed rates for properties with strong credit tenants and long lease terms.
Cons: Life company capital is selective, with lower leverage and strict tenant and lease requirements.

Alternative financing strategies

As conventional sources remain conservative, many investors are turning to alternatives that balance flexibility with cost.

Sale-leaseback financing

Sale-leasebacks remain one of the most effective tools in today’s higher-rate environment. Operators sell their properties to investors and sign long-term leases, unlocking capital while ensuring continued occupancy. For buyers, these deals often provide attractive yields, while sellers gain liquidity without losing operational control.

Private debt funds

Private lenders are stepping in where banks hesitate. These funds provide faster approvals and flexible underwriting, particularly for transitional assets or value-add plays.

Pros: Speed and flexibility, with willingness to finance deals in secondary markets.
Cons: Higher borrowing costs, often ranging from 8 to 10 percent, and shorter loan terms.

Mezzanine debt and preferred equity

In deals where senior debt is insufficient, mezzanine financing or preferred equity can fill the gap. These tools are particularly useful for acquisitions requiring higher leverage or recapitalizations.

Bridge loans

Bridge financing offers temporary solutions for acquisitions or refinancing when permanent debt is unavailable. Though expensive, bridge loans allow investors to secure properties and wait for more favorable lending conditions.

Strategies for securing favorable terms

In 2025, lenders are highly selective. Net lease investors can increase their odds of securing favorable terms by focusing on fundamentals:

Tenant creditworthiness: Properties leased to investment-grade tenants such as Walmart or CVS consistently attract better rates and terms.

Lease length: Leases with 10+ years remaining are far more attractive to lenders than those nearing expiration.

Market quality: Properties in major metros or high-growth Sun Belt markets typically qualify for better loan structures.

Cap rate alignment: Financing works best when spreads between borrowing cost and property yield are sufficient. Investors are focusing on assets where the spread is at least 150 to 200 basis points.

Borrower profile: Strong liquidity, experience, and a proven track record help secure financing at lower spreads.

When traditional financing falls short

The challenges of 2025 are clear: loan rates remain in the 5.5 to 6.5 percent range, leaving thinner spreads for buyers. Investors with loans maturing in this environment face refinancing risk, especially if they purchased during the historically low-rate period of 2020 to 2021.

Secondary and tertiary markets face the most difficulty, as lenders focus on core and growth metros. Non-credit tenants also face higher scrutiny, as lenders prioritize stability and guaranteed rent streams.

When traditional bank or CMBS financing is not available, creative solutions such as sale-leasebacks, private debt funds, and mezzanine equity partnerships are becoming more common. These strategies ensure deals continue to move forward even as conventional capital tightens.

Market outlook: Financing in H2 2025 and beyond

The Federal Reserve recently cut its benchmark rate by 25 basis points, the first adjustment of 2025. While this move provides some relief to borrowers, financing costs remain well above pre-2022 levels. For many investors, the immediate impact is limited, but sentiment has improved and lenders may begin to modestly ease terms if further cuts materialize.

Looking ahead, lenders are expected to remain cautious. Credit quality, lease duration, and tenant resilience will continue to drive decisions. Capital stack creativity that combines senior debt, mezzanine financing, sale-leasebacks, or preferred equity is becoming a core strategy for optimizing leverage.

Over the long term, NNN investors may need to adjust return expectations. Stable income, tenant durability, and inflation-resistant net leases remain the biggest draws of the asset class, even if financing costs are structurally higher than in the past decade.

Flexibility and alignment

In today’s environment, there is no one-size-fits-all financing solution for NNN properties. Net lease investors who remain flexible, explore alternatives, and align financing strategies with tenant strength and property fundamentals are best positioned to thrive.

By leveraging tools such as sale-leasebacks, mezzanine financing, and private debt funds, and by staying disciplined on credit and lease quality, investors can continue to generate strong, stable returns.