Types of net leases

There are standard names in the commercial real estate industry for different sets of costs passed on to the tenant in a net lease. Double and triple-net leases are more common forms of net leases.^[2]

Single net lease (N)

In a single net lease (sometimes shortened to Net or N), the lessee or tenant is responsible for paying property taxes as well as the base rent.

Double net lease (NN)

In a double net lease (Net-Net or NN) the lessee or tenant is responsible for property tax and building insurance. The lessor or landlord is responsible for any expenses incurred for structural repairs and common area maintenance. "Roof and structure" is sometimes calculated as a reserve amount, which the tenant must pay.

Triple net lease (NNN)

A triple net lease (Net-Net-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance on the property. In such a lease, the tenant or lessee is responsible for all costs associated with the repair and maintenance of any common area. This form of lease is most frequently used for commercial freestanding buildings. However, it has also been used in single family residential rental real estate properties.^[3]

Bondable lease (Absolute NNN)

A bondable lease (also called an "absolute triple net lease", "true triple net lease", or a "hell-or-high-water lease") is the most extreme variation of a triple net lease, where the tenant carries every imaginable real estate risk related to the property. Notably, these additional risks include the obligations to rebuild after a casualty, regardless of the adequacy of insurance proceeds, and to pay rent after partial or full condemnation. These leases are not terminable by the tenant, nor is it permissible for rent to be abated under them.

The concept is to make the rent absolutely net under all circumstances, equivalent to the obligations of a bond. An example of this type of lease would be a leaseback arrangement in which a retailer leases back the building it formerly owned and continues to run the operate its business at the location.

Economics

Typically, triple net leases (NNN) are 'equity investments', rather than 'cash flow investments'. For example, the investor will finance a significant portion of the purchase price on a property and pay the resulting mortgage with the lessee's monthly owed rent. There is usually a small amount left over as monthly profit for the investor (positive cash flow), but the greater investment payoff comes from the tax shields afforded to the investor through the use of leverage. The resulting property is then sold after a period of building up equity.

Are you looking for a specific location or NNN tenant?

At nnndeals.com We pride ourselves in excellent client service. We have access to an extensive inventory of triple net single tenant properties for sale and contacts to find you exactly what you are looking for such as:  

7- Eleven, Advance Auto Parts, Applebee's, AT, Autozone, Bank of America , BB, Best Buy, Bed Bath & Beyond, Blockbuster, BP, Burger King, Chase Bank, Chevron, Chili's, Citibank, Costco, CVS, Dollar General, DaVita,Exxon Mobil, FedEx, Food Lion, Foot Locker, Gap, Goodyear, Home Depot, Jack in the Box, JC Penney, Jiffy Lube, Key Bank, KFC, Kindercare, Kmart,Kohl's, Lowe's,McDonald, Nordstrom, Office Depot, Office Max, Olive Garden, Pep Boys, PetSmart, Pizza Hut,  PNC Bank, Popeyes, Radio Shack, RBC Bank, Regal, Rite Aid, Ross Stores, Ruby Tuesdays, Safeway, Sears, Staples, Starbucks, Shell Oil, Taco Bell, Target, T-Mobile, Verizon, Wachovia, Walgreen, Wal-Mart, Wells Fargo, Wendy's, Whole Foods, etc,

Please contact us if you are buying or selling a net leased property. We get results.  Email: info@nnndeals.com