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 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. The standard names in the commercial real estate industry on the various sets of costs which are passed on 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. When it comes to triple net lease investments, they are generally offered as a portfolio of real estate properties consist of three or more high-grade commercial properties, wherein a single tenant lease it with an existing 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. 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.
Like any other investment, there are a lot of factors you need to consider when structuring and valuing the deal. You need to assess the potential tenant to ensure the quality and health of its business model, as well as the financial strength or capability. The different criteria you need to look for may include the operational margin, number of stores, stability of management, debt to equity ratios, and the outlook for the industry sector. You’re essentially providing a real estate capital to the business when you are leasing your property, 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.