A triple net lease refers to a leasing agreement which designates the lessee in which the tenant is primarily responsible for all the associated costs of the asset being leased, in addition to the rental fee which is applied to the lease. The expenses include insurance, property taxes, repair, maintenance, utilities, operations, and other items. Triple a net lease is also called as net-net-net (NNN) lease that relates to net real estate taxes, net common area maintenance, and net building insurance. In net lease, there are standard names in the commercial real estate which include single net lease, double net lease, triple net lease, bondable lease, and ground lease.
Triple net leased properties are becoming popular investment medium for investors who are seeking a steady income with a relatively lower risk. Triple net lease investments are normally offering a portfolio of properties which consist of three or more high-grade commercial properties which are fully leased by a single tenant with current in-place cash flow. Shopping centers, office buildings, industrial parks or free-standing buildings operated by restaurant chains or banks are the commercial properties under the triple net lease, with a typical lease term agreement of ten to fifteen years in a built-in contractual rent escalation. Triple net investments help investors gain long-term and stable income with capital appreciation of the property. The management is free from management responsibilities, a long-term lease to a qualified tenant, attractive financing, stable cash flow, and unique tax benefits which only real estate provides. A triple net investment is appealing to a part-time investor who is looking for a guaranteed income without the risks of management responsibilities, and it is an attractive exit strategy for those with matured portfolios.
Like any other investment, there are a lot of factors you need to consider when structuring and valuing the deal. It is very important to assess the health and quality of a tenant’s business, ensuring the financial strength or financial capability. In terms of tenant evaluation, it is important to consider the number of stores, operating margins, debt to equity ratios, outlook of the sector of their industry and stability of management. In a triple net investment, you are actually providing a capital to your tenant’s business, and the success has a direct bearing on the long-term success of your triple net investment. Just contact us by checking our details in our website’s homepage if you are looking for triple net investment.