Who's Actually Reading Your Net Lease OM?

You wrote it for an acquisition committee. Maybe without thinking about it — that's what net lease OMs look like. Cap rate summary, investment thesis, discounted cash flow analysis. IRR projections at three exit cap scenarios. Polished. Thorough.

Seventy-one percent of single-tenant net lease transactions last year were done by private buyers. By transaction count, per Marcus & Millichap's 2025 STNL National Report. Not dollar volume — deal count. The committee you wrote for? That's 29% of the market.

This isn't a quirk of a down year. Private buyers — 1031 exchangers, high-net-worth individuals, family offices — have dominated net lease by transaction count for years. Volume was up 18% year-over-year through Q3 2025. Northmarq just formalized a national net lease and sale-leaseback practice group this month — a fourth national specialty group, built explicitly because deal flow in the sector is sufficient to justify dedicated infrastructure.

More OMs hitting more private buyers. That's the market you're competing in.

The templates most brokers use weren't designed for it.

The 1031 clock changes the reading order

A 1031 exchange buyer isn't evaluating your deal against a portfolio allocation model. They have 45 days to identify a replacement property and 180 days to close. They made the decision to exchange months ago when they sold the relinquished property. Now they're executing under real time pressure.

That changes how they move through an OM.

They need to answer two questions fast: Is this tenant going to pay rent? And what's my actual annual income? Everything else is secondary. They're not running three exit cap sensitivity tables. They don't have Moody's on retainer. They're reading your investment thesis, your rent schedule, and your lease summary — and forming a judgment from those three sections faster than you'd expect.

This isn't a sophistication gap. Plenty of 1031 buyers are financially sharp and have done this many times. The issue is time pressure and document priorities. A sophisticated 1031 buyer still needs the lease term and income stream surfaced immediately, because they're working a deadline. If they don't find those numbers in the first few pages, they've already started to form a negative impression before they've seen your strongest data.

If your executive summary leads with yield-on-cost analysis and DCF assumptions, you've opened with the wrong page for three-quarters of your buyers.

The 140 basis point problem

Tenant credit isn't just a quality signal in net lease — it's a 140 basis point pricing gap right now.

McDonald's ground leases are trading around 4.38%. Walgreens is above 7%. Both are single-tenant net lease retail. The spread between top-credit and mid-credit tenants hit 140 bps in Q4 2025, per Boulder Group's research.

Institutional buyers know this landscape. They have internal credit models, CMBS market comparables, and analysts who track retail operator same-store metrics as a matter of course.

Private buyers often don't have that. A 1031 buyer evaluating a mid-credit tenant — regional drug chain, second-tier QSR, local grocery anchor — may not know whether this chain is expanding or closing stores, what their rent-to-revenue ratio looks like, or how their real estate decisions have trended over the last three years.

If the OM doesn't walk through the tenant's credit story explicitly — not just name them, but show the actual business health indicators — the private buyer fills in the gaps themselves. Their version is almost always more pessimistic than yours.

For a mid-credit tenant at a 6.2% cap, 140 bps is the difference between a deal that makes sense and one that doesn't. That gap is yours to capture or surrender. The OM structure determines which.

The document hierarchy question

The adjustments aren't major. It's mostly about what appears where.

A 1031 buyer will look for the lease term in the first 30 seconds. If they don't find it, they've already formed a negative impression before getting to your submarket analysis. Lead with lease expiration, renewal options, and rent bumps — in the executive summary, not buried in section 6.

When the tenant is a recognizable brand, don't just name them. Show how many locations the chain operates, whether they've been growing or contracting, and what their rent-to-revenue ratio is if you have it. A buyer on a 45-day identification deadline isn't going to Google this under time pressure. The OM that provides it wins the first call.

Show annual cash flow in dollars alongside the cap rate. Cap rate is a useful ratio. But "$127,400 per year through 2033, with 10% bumps at each 5-year renewal option" is more concrete for someone who sold a property and knows the income they're trying to replace. Both numbers belong in the same section.

If you're selling to buyers who typically use financing — and most private net lease buyers do — include a leveraged cash-on-cash scenario in the financial section, not in an appendix footnote. All-cash returns are an incomplete picture for most of the people reading.

What this doesn't mean

None of this is an argument for a simpler document. Institutional buyers who receive a clean, well-organized OM read it fast and take it seriously. The private buyer who's done this before can handle analytical depth.

The net lease OM that works for a 1031 buyer and a REIT analyst is mostly the same document. The difference is hierarchy: which numbers surface first, how the tenant story is told, whether the income picture is clear before the reader reaches the appendix.

A document still structured around committee-style DCF analysis that buries the lease summary is calibrated for a shrinking minority of your buyer pool. Northmarq building a national practice group around net lease deal flow isn't a sign that the asset class is becoming simpler — it's a sign that competition for the same buyers is intensifying.

The OM is your first impression with a buyer who has a deadline and alternatives. Where your numbers appear matters as much as what they are.

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DealDraft builds offering memorandums where the lease summary and income story appear where private buyers look for them — not where templates put them.