Browse Tag: Leasing

Tenants, Taxes, Insurance And Maintenance: Triple Net Leases Explained

Commercial property ownership doesn’t have to come with the classic landlord obligations of taxes, maintenance and insurance.  As some investors will tell you, success in property investment can be measured by net trips to the mailbox: if a property owner is writing more checks than she is receiving, there’s often a way to improve that situation by offloading costs onto tenants. In a nutshell, that’s what the triple-net lease does — assigns the costs of property taxes, insurance and maintenance to the tenant as enunciated in the lease agreement.

While the idea seems revolutionary to those who are first hearing it, it’s important to remember there’s no such thing as a free lunch. Triple net isn’t appropriate in every case. The fact is that the creditworthiness of tenants — related usually the degree to which they are backed with guarantees that come with national corporate presence — is the hinge point around which a triple net proposition revolves.

Another reason triple net might not work for the landlord is the fact that tenants who pay taxes, maintenance and insurance necessarily seek lower rent payments. What this does to an owners NOI (net operating income) on the property is of course lower it, which means putting pressure on downstream cash flow requirements that may have been put in place as a result of some portfolio management technique.

Looking for more perspectives on net lease agreements? Check out these short videos from experts, agents and brokers around the US on the subject. It’s useful to hear the different angles on net, double-net and triple-net leasing structures all in one handy spot.


Wherein Chris Mirabella, a financier of triple-net properties based out of Carlsbad, CA gets into his company’s history with triple net and what the leas structure means at various stages of the deal.



Here we find Michael Bull of the Commercial Real Estate Show delivering intel on the net tenant lease sector interviewing CE Hutton of the Hutton Company.



Giving a shorter, more street-level perspective is Edina, MN’s Scott Miller of Keller Williams.

Video: Excel How-To: Lease Pro-Forma

Would-be Excel jockeys, take a peek at this. It’s a 40-minute clip detailing the analysis of leases from the tenant and the landlord perspectives. Veterans and rookies alike can learn a thing or two about detailing a lease deal for either side of the table.

Learn about the major variables, learn about how tenants and landlords see these variables differently, and how the math differs between the two. When costs are shared through various means, the numbers jiggle around, and this clip shows how to stay on top of exactly that.

(The video producer is the publisher of a toolkit called  This post is presented as an educational item and is not an endorsement of this offering.)


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Getting To The Bottom Of The Proposed Lease Accounting Rules Changes

Illustration of new lease accounting

As we’ve written about before, recent proposed changes to accounting standards would have enormous impact on commercial real estate leases.  NAR has been on the forefront of calls to ensure proposals do not adversely impact our industry.

What might not be clear is that these changes impact not only commercial real estate, but all commercial leasing in general.  That means that our industry is one of a set of industries that do business using leases and for whom these accounting standards changes would bring major changes to business and markets.

While reading up on the impacts to commercial real estate first and foremost will get you caught up on the impacts to our industry, you don’t need to stop there.  The Federal Accounting Standards Board, FASB,  the body who is undertaking the proposal to make the accounting changes, has made public over 800 comment letters from around the world on the matter of lease accounting standards changes.

The renting of everything from trucks to planes to equipment, the markets for life insurance, the use of service contracts are all potentially touched by these proposed standards changes.  With over 800 letters to choose from, FASB has done us a valuable service in collecting in one spot so many voices from the business communities that depend on leases and their accounting rules. Reading through the comment letters shows in how many ways these accounting rules changes, if adopted, can wreak havoc on a wide set of industries and produce negative consequences far beyond the ills the changes are meant to address.

Ground Leases: An Overview From CCIM

From the raw land, development and investment side of things: CCIM Institute’s newest podcast is a discussion with Philip “Fred” Himovitz, CCIM, all about the ins and outs of the ground lease.  The advantages and considerations of ground leases over fee simple ownership are explored, as well as seniority, management, financing and tenant issues. Even though the podcast is under nine minutes, a solid summation of ground lease structures and purposes is covered.

Popular in the development of raw land, ground leases are also instrumental in the development market for alternative energy. In some states, temporary interest in land is obtained by wind farm builders using a ground lease.  This frees up the builder from taking title or committing the planned use to an indefinite term, which is instrumental in attracting investment in these early days of such important technologies.

Current market conditions have led to ground leases being more widely accepted and understood. They provide opportunities to reduce capital requirements and allow ideal platforms for joint ventures.  These deals are usually of a long term and let developers and landowners partner in the development, creating the opportunity to shape a deal’s risk profile and more readily allow securitization to spread risk – and returns – around.

To listen to the CCIM podcast on ground leases, click here. 

For a more in-depth treatment of ground leases, check out’s Field Guide To Ground Leases.  NAR members can find ebooks, books, videos and research reports detailing the topic.

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