What is a Triple Net Lease? Here is a quick summary of the triple net lease definition:
A lease in which the lessee (tenant) pays rent to the lessor (landlord), as well as all taxes,insurance, and maintenance expenses that arise from the use of the property. The base rent is “net” to the landlord and landlord does not pay any expenses for operation of the property.
What Does Triple Net Lease Mean?
A lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name: net, net, net or NNN or Triple Net
Triple Net Lease is also be referred to as a “net-net-net lease” or a “hell or high water lease”
This is how Investopedia explains Triple Net Lease
For example, if a property owner leases out a building to a business using a triple net lease, the tenant will be responsible for paying the building’s property taxes, building insurance and the cost of any maintenance or repairs the building may require during the term of the lease. Because the tenant is covering these costs (which would otherwise be the responsibility of the property owner), the rent charged in the triple net lease is generally lower than the rent charged in a standard lease agreement. This is also called the net rent or base rent.
Typical net leased properties and net leased investments are leased to investment grade credit tenants such as:
- Best Buy
- Home Depot
- Burger King
- Auto Zone
- Checker Auto
- Tractor Supply Company
- and many other triple net lease tenants