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 triple net lease expenses are categorized into “three nets” which include property taxes, maintenance, and insurance. Triple net lease is also commonly referred to as net-net-net (NNN) lease relating to net real estate taxes, net common area maintenance, and net building insurance. In the commercial real estate, the standard names on the different sets of costs being passed to the tenant include single net lease, double net lease, triple net lease, bondable lease, and ground lease.
Triple net leased properties have become increasingly popular for those investors who are looking for a steady income with a relatively lower risks as compared to other forms of investments. 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 leased properties offer a lot of benefits to investors that include long-term and stable income with capital appreciation of the property. If you invest in a triple net property, you have freedom from management responsibilities, you can lease the property to a qualified tenant, you receive a stable cash flow, with attractive financing, 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.
As with any other forms of investment, you know as an investor that there are associated risks, so you need to consider important things when structuring and valuing the deal. it is crucial to assess the quality or health of your tenant’s business, making sure that the tenant is capable of sustaining his business, with financial strength and 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. You may contact us by checking our details in our website’s homepage if you are looking for triple net investment.