A triple net lease, also known as an NNN lease, is a type of commercial real estate lease agreement that places the primary responsibility for property expenses, such as taxes, insurance, and maintenance costs, on the tenant rather than the landlord. In a triple net lease, the tenant is responsible for paying not only the base rent but also the net amounts for property taxes, insurance premiums, and maintenance expenses. Here are a few examples of triple net lease structures: 1. Single Tenant Triple Net Lease: In this type of lease, a single tenant leases an entire commercial property, such as a retail store or office building, and is responsible for all property-related expenses. The tenant pays the base rent along with property taxes, insurance, and maintenance costs directly, providing the landlord with a predictable income stream. 2. Retail Triple Net Lease: Retail triple net leases are commonly used for freestanding stores or shopping center spaces. In this lease arrangement, the tenant not only covers property expenses but also pays a percentage of their sales, known as percentage rent. This allows the landlord to benefit from the success of the tenant's business, particularly in high-traffic retail areas. 3. Industrial Triple Net Lease: Industrial triple net leases are commonly used for manufacturing facilities, warehouses, or distribution centers. Tenants in industrial leases typically need large spaces for their operations and may require additional modifications to suit their specific needs. The tenant is responsible for not only the base rent but also all property expenses, ensuring that the facility is well-maintained and functional. 4. Ground Lease: A ground lease is a long-term agreement in which the tenant leases the land from the property owner while retaining the responsibility for all property-related expenses, including property taxes, insurance, and maintenance. This lease type is commonly used for large-scale developments, such as shopping centers or commercial complexes. 5. Sale-Leaseback: In a sale-leaseback arrangement, the property owner sells the property to an investor and simultaneously signs a long-term triple net lease to continue operating within the property. This allows the property owner to free up their capital while retaining beneficial use of the property and continuing their business operations. Triple net leases provide several benefits to both tenants and landlords. Tenants have more control over the property's expenses and can customize the space to suit their specific needs. Landlords, on the other hand, benefit from a predictable income stream and reduced financial responsibilities. In conclusion, triple net leases are a type of commercial lease agreement where the tenant pays not only the base rent but also the property taxes, insurance, and maintenance expenses. Single tenant, retail, industrial, ground lease, and sale-leaseback are some different types of triple net leases found in the commercial real estate market.
Triple Net Lease Example
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How to fill out Triple Net Commercial Lease Agreement - Real Estate Rental?
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FAQ
Triple net lease (NNN) is normally a commercial lease where the lessee pays rent and utilities as well as three other types of property expenses: insurance, maintenance, and taxes.
What Is a Triple Net Lease (NNN)? A triple net lease (triple-net or NNN) is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property, including real estate taxes, building insurance, and maintenance. These expenses are in addition to the cost of rent and utilities.
The 2,000 square feet represents 20% of the retail center's square footage. The base rent for the property for year one would be $40,000 per year. Because this is a triple net lease, the tenant is responsible for paying 20% of the landlord's operating expenses for the retail space (its pro rata share).
The latter pays off maintenance charges, real estate insurance, and property taxes?in addition to rent. How do you calculate the triple net lease? The NNN lease is computed as the sum of base rent amount, property maintenance charges, tax, and insurance divided by the total number of months in the year, i.e., 12.
NNN ? Triple Net ?This type of lease rate includes the base rental rate plus the three N's. One ?N? stands for property taxes, one for property insurance, and the final ?N? stands for common area maintenance (CAMs).