Rising interest rates continued to widen cap rates in the third quarter of 2022, though with loan and bond yields approaching or exceeding 10%, sale leasebacks became inside not just many companies' weighted average cost of capital, but their debt financing costs as well, making the structure an increasingly attractive alternative to traditional financing. North American M&A activity declined for a third consecutive quarter, as inflation and rising rates weighed on valuations and influenced seller timing. Despite these headwinds, an attractive value arbitrage between business and real estate multiples persisted across industry sectors, and pitch activity, a leading indicator for future dealmaking, remained strong heading into the following quarters.
