We created the Net Lease ETF & Index to define and track the performance of the rapidly expanding public net lease real estate sector. Investors now have the opportunity to own the public net lease sector in a diversified, tradeable and transparent manner.
Not All Real Estate Is Created Equal
Many investors allocate capital to public REITs as if it is a single asset class, or solely based on a property type, such as office, industrial or retail. We believe both approaches fall short. We focus instead on how these companies generate cash flow, rather than on behavioral biases that have little to do with investment results.
Publicly traded net lease REITs share a common business model, which is centered around a specific lease type, not just a property type. This business model creates four layers of diversification: (1) property type; (2) tenant; (3) industry; and (4) geography.
Net lease REITs use this business model to generate predictable cash flow derived from long-term lease contracts with built-in rent increases and minimal to no landlord responsibilities. As a result, net lease REITs have the highest gross profit margins (approximately 90%) and highest EBITDA margins (approximately 79%), relative to any other public REIT sector.
Fundamental Income, through its proprietary public index, the Fundamental Income Net Lease Real Estate Index (NETLXT), calculated by NASDAQ, serves as the index provider to the NETLease Corporate Real Estate ETF (NYSE Arca: NETL). We partner with best-in-class firms to democratize the public net lease sector in a diversified, transparent, and tradable manner.
Broad Based Exposure to the US Economy
Net lease REITs own single-tenant, free-standing commercial properties that serve as the backbone of American business. Including many household names, tenants of publicly traded net lease REITs benefit from the everyday activities of US consumers. Across nearly every sector, industry, and geography, this broad mix of tenants offers investors highly diversified exposure to US corporate real estate and the economy as a whole.
FedexAmazonThe Home DepotWalmart7-ElevenWalgreensDollar GeneralCircle KSherwin WilliamsBass Pro ShopsTaco BellAdvance Auto PartsPenskeDardenTSCAlbertson’s
Net Lease Sector Index Highlights
As of December 31, 2020
13.0 yrsWtd. Avg.
Remaining Lease Term
15.9xEquity Cash Flow Multiple
6.8 yrsWtd. Avg. Debt / Debt Term Remaining
3.7%Avg. Borrowing Rate
12.6%Avg. Annual Return
Public Net Lease REITs
Gross Assets (billions)
CAGR (Growth Assets)
LTM Sept 2020 Asset Growth
Sector Gross Assets
Historical Back Tested Performance
Fundamental Income Net Lease Real Estate Index
MSCI US REIT Index
IBOX USD Liquiid High Yield Index
S&P/LSTA U.S. Leveraged Loan 100
Alerian MLP Infrastructure Index
DISCLAIMER: Back-tested performance is not actual performance, but hypethetical. The back-test calculations are based on the index's current constituents. Prior to 2017 the back-test used an equal weighted methodology. The index inception date was 12/21/2018. All data prior to the inception date is back-tested. Index returns are quoted before fees and expenses.
You are now leaving the Fundamental Income website. The following link may contain information concerning investments, products or other information. Read carefully before investing and consult an investment professional. Diversification does not guarantee a profit or protect from loss in a declining market. Back-tested performance is not actual performance, but hypothetical. Fundamental Income is not responsible for the accuracy or completeness of information on non-affiliated websites. The material available on non-affiliated websites has been produced by entities that are not affiliated with Fundamental Income.