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Triple Net Lease (NNN)

A commercial lease structure where the tenant pays property taxes, insurance, and maintenance on top of rent.

Definition

A triple net lease (NNN) is a commercial lease arrangement where the tenant pays not only base rent but also the property taxes, insurance premiums, and maintenance costs of the property. This shifts most operating expenses from the landlord to the tenant, providing the landlord with predictable, low-risk income. NNN leases are common in retail, freestanding restaurants, and industrial buildings.

Example

A national pharmacy chain signs a 15-year NNN lease at $45,000 per year. They also pay the property's $8,000 annual taxes, $2,500 insurance, and all maintenance directly. The landlord receives $45,000 with virtually no operating expenses, making the income highly predictable.

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