Net-Lease Cap Rates Tick Up as the Fed Takes Its Rate Cut Off the Table

The Signal:

• The rate-cut-is-coming trade is off; underwriting has to stand on today's cost of capital.
• Cap rates are drifting up, but liquidity has not broken.
• Credit tenancy and lease term are back to doing the pricing work.

Net lease is the cleanest read on how CRE is absorbing a higher-for-longer Fed, because its pricing is almost pure math: contractual rent divided by a cap rate that tracks the risk-free curve. When the Fed pulled its 2026 cut, that math moved — and cap rates ticked up.

The important part is what didn't happen. Volume held. A 5 bps drift with steady transaction flow is an orderly repricing, not a freeze — buyers marked to the new curve and kept transacting.

The structural read is a return to fundamentals. With no rate cut to underwrite toward, pricing sorts on tenant credit and lease duration again. Investment-grade paper holds near 6.80% while weaker credit has to clear wider.

Implications: Sellers underwriting a 2026 cut into their pricing need to reset expectations; the bid is real but it's at today's curve. Buyers get a cleaner market where credit and term determine value. For anyone financing acquisitions, stop pricing in relief the Fed just removed from the calendar.

Key Takeaway: The rate-cut trade is dead; net-lease pricing now stands on credit, term, and today's curve.