What Is an NNN Lease

An NNN lease, short for triple net lease, is a commercial lease agreement in which the tenant generally agrees to pay the three major categories of property operating cost, namely property taxes, building insurance, and maintenance expenses, in addition to base rent. This differs from a single net lease, where the tenant generally pays only property taxes, and a double net lease, where the tenant generally pays property taxes and insurance but the landlord generally retains responsibility for structural maintenance. Understanding where a specific lease falls on this spectrum is important for Columbus, OH investors, since the terminology is not always applied consistently and the actual lease document generally controls which expenses the tenant is responsible for.

In an absolute triple net lease, sometimes described as a bondable lease, the tenant generally assumes responsibility for essentially all property level expenses, including structural repairs and roof replacement, leaving the landlord with minimal ongoing obligations. Many single tenant retail and industrial buildings acquired by Columbus, OH investors as one thousand thirty one exchange replacement property use this structure because it generally provides a highly predictable income stream well suited to investors who want passive ownership after completing an exchange. Investors evaluating an NNN lease document generally review the specific expense allocation clause by clause rather than relying on the NNN label alone, since the degree of landlord responsibility can vary meaningfully between individual leases described using the same terminology.