Net Lease
Net Lease
A net Lease is a type of commercial real estate Lease in which the tenant agrees to pay, in addition to the base rent, some or all of the property’s Operating Expenses. These expenses can include Property Taxes, insurance, and maintenance costs. Net Leases are often categorized into three main types: single net Lease (N), double net Lease (NN), and triple net Lease (NNN).
Examples:
- Single Net Lease (N): The tenant pays rent plus Property Taxes. The landlord covers insurance and maintenance.
- Double Net Lease (NN): The tenant pays rent plus Property Taxes and insurance. The landlord is responsible for maintenance.
- Triple Net Lease (NNN): The tenant pays rent plus Property Taxes, insurance, and maintenance costs. This is the most tenant-responsible Lease type.
Cases:
In a commercial property Leased under a triple net Lease, a retailer may negotiate a lower base rent in exchange for taking on the Operating Expenses. For example, a grocery store chain Leases a SPACe and is responsible for all maintenance, taxes, and insurance, allowing the landlord to have a steady income with minimal involvement.