Triple Net (NNN) - Types of Commercial Leases - Part 2
Last Updated Aug. 11, 2019
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Triple NNN or Triple Net - A NNN lease is set up to have the Tenant pay a base rental amount each month to the Landlord. In addition to the base rent, the Tenant also reimburses the Landlord monthly for the tenant’s pro-rata share of certain estimated expenses (“reimbursables”). These expanses may include property taxes, property insurance, and Common Area Maintenance (CAM) “Reimbursables” are those expenses the landlord pays for out of pocket, but for which he contractually expects to be reimbursed by the Tenant.
NNN leases differ from true or absolute NNN leases usually only in landlord responsibilities. For example, a True NNN lease usually has no landlord responsibility where a general NNN lease may call for the Landlord to maintain the roof, walls and foundation…or some combination thereof. These leases can be used for all types of commercial properties, but are more often used on single user, leased property.
Leasing Overview Information
Our article - Types of Commercial Real Estate Leases - provides an overview of the major lease types used in Commercial Leasing.
Our article - Entering Into a Commercial Lease Agreement - A Guide From a Broker - provides a more comprehensive overview/guide to Commercial Leasing.
A commercial lease is, at least in general, a detailed specification of what property you will gain access to as a tenant, along with the responsibilities of tenant and landlord in terms of the elements of the property and the expenses involved. There are many different types of leases. Each should be analyzed carefully to see that they meet your expectations. Divvying up who will pay for what costs - now and throughout the life of the lease - is a major aspect of any lease. Some (many if not most, I hope) of these costs categories are summarized in the table below:
Expense Category | Responsibility |
Base Rent | |
Insurance | |
Taxes | |
Property Improvements | |
Property Repairs | |
Common Area Maintenance (CAM) | |
* Landscaping | |
* Mowing | |
* Maintenance | |
* Janitorial | |
* Security | |
* Supplies | |
* Food Service | |
* Vending | |
* Etc. | |
Utilities | |
* Water | |
* Electricity | |
* Sewer | |
* HVAC | |
* Sanitation | |
* Telecomm | |
* Networking | |
* Etc. |
A big part of a lease is outlining how these and other expenses are divided between landlord and tenant and how these expenses can vary over time for the tenant - which can, and probably should be limited by caps applied in the lease.
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