Realty Income (O), NNN REIT (NNN), Broadstone Net Lease (BNL)
January 2026
Why Net Lease REITs Are Back in Focus
The backdrop for real estate income investors has shifted meaningfully. Interest rates have peaked, financing costs are stabilizing, and new commercial supply is slowing sharply. At the same time, underlying demand for essential-use real estate remains resilient. For Investment Grade income portfolios, this combination matters.
Market expectations now lean toward multiple rate cuts in 2026, with a consensus view that policy rates move closer to the low 3 percent range. Historically, periods of declining rates have favored REITs by reducing debt costs, improving acquisition spreads, and restoring yield competitiveness relative to Treasuries and corporate bonds. Net lease REITs tend to benefit disproportionately due to their long lease terms, predictable cash flows, and disciplined capital structures.
On the supply side, inflation-adjusted commercial construction spending has contracted at the steepest pace since the Global Financial Crisis. That contraction tightens future availability and supports occupancy and rent growth. Demand indicators, including real GDP growth over the past two years, remain constructive for commercial real estate fundamentals.
Despite ongoing concern around commercial real estate loan defaults, stress remains concentrated in office and select segments of multifamily that relied heavily on floating-rate debt. Net lease portfolios, which are typically conservatively financed and diversified across necessity-based tenants, have largely avoided those pressures.
Against this backdrop, net lease REITs offering yields well above the risk-free rate, with strong balance sheets and long dividend histories, stand out as Investment Grade income candidates. The following three names meet that standard.
Realty Income, Global Scale and Dividend Reliability
Realty Income is the bellwether of the net lease sector. With a market capitalization exceeding $50 billion and operations spanning nine countries across North America and Europe, it represents institutional-grade scale and diversification. The company has operated continuously as a REIT since 1969 and owns more than 15,000 properties totaling approximately 349 million square feet.
Occupancy stands near 99 percent, reflecting the essential nature of its tenant base. Approximately 82 percent of annual base rent is generated in the United States, with meaningful exposure to the United Kingdom and continental Europe. The portfolio is diversified across more than 1,600 tenants and 92 industries, with no single tenant representing more than a low single-digit percentage of rent.
Retail remains the dominant exposure, but industrial properties account for a growing share, while office and gaming represent only a small portion of rent. This mix has supported resilience through multiple economic cycles.
Growth at Realty Income is driven primarily by external acquisitions. In 2025, the company sourced nearly $100 billion in acquisition opportunities, reflecting its cost-of-capital advantage and global sourcing platform. Funds from operations have grown at a healthy pace, with per-share growth remaining positive despite the company’s size.
The balance sheet is a defining Investment Grade attribute. Debt represents roughly one-third of total capitalization, debt to EBITDA sits in the mid-5x range, and the company carries an A minus credit rating. Nearly all debt is unsecured, the weighted average maturity exceeds six years, and liquidity remains ample.
Realty Income’s dividend profile is unmatched in consistency. The company pays monthly and has delivered more than 650 consecutive monthly dividends, with over 110 consecutive quarterly increases. The current yield sits comfortably above 5.5 percent, supported by a payout ratio near 70 percent. Dividend growth is modest but reliable, which is precisely what long-duration income investors prioritize.
From a valuation standpoint, Realty Income trades at a reasonable multiple of forward funds from operations and near net asset value. While it may not offer the highest upside among peers, it anchors an Investment Grade income portfolio with stability, liquidity, and unparalleled dividend dependability.
NNN REIT, Domestic Focus and Conservative Execution
NNN REIT represents a more concentrated, U.S.-only approach to net lease investing. With a market capitalization above $7 billion, the company owns nearly 3,700 properties across all 50 states and serves approximately 400 tenants. The weighted average lease term exceeds 10 years, and occupancy remains near 98 percent.
Tenant diversification is strong, with automotive services and convenience retail among the largest industry exposures. No single tenant accounts for an outsized portion of rent, and the top ten tenants collectively represent less than one-third of annual base rent.
Growth at NNN has been steady rather than aggressive. Funds from operations and cash flow have increased incrementally, reflecting management’s conservative acquisition strategy and focus on accretive, relationship-driven transactions. Return on equity remains solid, and asset growth has continued at a measured pace.
The balance sheet reflects classic Investment Grade discipline. Debt to capitalization is in the mid-30 percent range, debt to EBITDA sits just under 6x, and the company maintains a BBB plus credit rating. Importantly, all debt is unsecured, there is no variable-rate exposure, and the weighted average maturity exceeds 11 years. Maturity ladders are well distributed, with several years carrying no maturities at all.
NNN’s dividend history is one of its strongest attributes. The company has increased its dividend for more than three decades consecutively, including through the pandemic. The current yield exceeds 6 percent, with a payout ratio near 70 percent and solid coverage from recurring cash flow.
Valuation remains attractive. Shares trade below the REIT sector average on a funds-from-operations basis and at a meaningful discount to net asset value. For income-focused investors seeking predictability and balance sheet conservatism, NNN fits squarely within an Investment Grade framework.
Broadstone Net Lease, Repositioning Toward Industrial Quality
Broadstone Net Lease is the smallest of the three but offers a compelling mix of yield and repositioning-driven upside. The company owns approximately 760 properties across the United States and Canada, leased to more than 200 tenants in over 50 industries. Occupancy approaches 99.5 percent, and the weighted average lease term is just under 10 years.
Over the past two years, Broadstone has deliberately reshaped its portfolio. Industrial properties now account for more than 60 percent of rent, up significantly from prior years, while exposure to office and clinical assets has been materially reduced through asset sales. This transition has improved portfolio durability and aligned the company with stronger long-term demand drivers.
Acquisition activity has accelerated meaningfully, with expected investment volume approaching $700 million for the year. A growing portion of this activity comes from build-to-suit industrial developments, which offer better control over asset quality, tenant selection, and capital efficiency.
Financially, Broadstone carries slightly higher leverage than the larger peers, with debt to EBITDA near the upper end of the net lease range and a BBB credit rating. The vast majority of debt is unsecured, though the weighted average maturity is shorter. Liquidity remains adequate, and fixed-charge coverage is strong.
The dividend is where Broadstone stands out. The current yield exceeds 6.5 percent, supported by stable cash flow and a payout ratio near 80 percent. While more aggressive than peers, the dividend has never been cut, including during periods of economic stress. Dividend growth has also been modestly stronger than sector averages.
Valuation remains compelling. Shares trade at a low multiple of forward funds from operations and at a meaningful discount to net asset value. For investors willing to accept slightly higher balance sheet risk in exchange for income and upside, Broadstone offers an attractive Investment Grade adjacent opportunity.
Investment Grade Takeaway
High yield typically demands higher risk. In the current environment, net lease REITs offer a rare exception. Declining rates, limited new supply, and durable tenant demand create a setup where reliable income does not require speculative exposure.
Realty Income provides unmatched scale, liquidity, and dividend certainty. NNN REIT offers conservative execution and balance sheet strength with above-average yield. Broadstone Net Lease adds incremental yield and valuation upside through portfolio repositioning.
For income-focused investors building long-duration, Investment Grade real estate allocations, this segment deserves renewed attention. The opportunity lies not in chasing growth, but in owning durable cash flow at attractive prices, while the broader market recalibrates.
As always, the final decision rests with the investor. Capital allocation should align with risk tolerance, income needs, and long-term objectives.
