How does a triple net lease work?
Base rent is lower than under a gross lease because the tenant also pays the property's operating costs. In a single-tenant building the tenant may pay those costs directly. In a multi-tenant property the landlord pays them and bills each tenant its pro-rata share through monthly estimates and an annual reconciliation.
"Single net" and "double net" leases pass through only some of these costs. Even in NNN leases, the lease may keep certain items, such as roof and structure, with the landlord.
See also: CAM reconciliation.
What does an NNN cost breakdown look like?
Example (illustrative figures). A 5,000 sq ft unit has base rent of $20 per sq ft ($100,000 a year). Estimated NNN charges are $4 tax, $1 insurance and $3 CAM per sq ft, so $40,000 a year. The tenant pays about $11,667 a month, and the $40,000 is reconciled to actual costs after year-end.
Related
Related terms
