What are NN and NNN Leases?

Welcome to the world of NN and NNN real estate! This area is a kind of niche market of the overall commercial real estate market. Many companies such as Chase bank, Wawa and Chick-fil-A prefer to lease their land or land and buildings long-term from wealthy investors who own them.

There are many financial reasons to do this and it has created a lucrative, conservative and predictable investment area for, up until now, wealthy investors who can afford the multi-million dollar price tags that these investments have. Often companies like McDonald’s or Chick-fil-A will prefer to lease the land upon which their building is built. These ground leases generally are for about 20 years or so with several renewal periods. Other companies like Starbucks can have an investor buy a piece of land, build a building and long-term lease the land and building to them for ten years or so with several renewal periods.

With either a ground lease or ground and building lease at the end of the lease period both the ground and building become the property of the landlord / investor! How great is that?! This type of single-tenant, NN or NNN real estate investing has, traditionally, been the province of the wealthy. Now, for the first time, small investors can enter this area of conservative, predictable cash flowing credit tenant real estate. Please note, a credit tenant is one like Starbucks who have publicly traded debt and are rated investment grade by either S&P, Fitch or Moody’s. In the case of Starbucks their debt is rated BBB+, or investment grade. NNN properties indicate that the tenant (McDonald’s, Chase, etc…) is responsible for all taxes, maintenance and upkeep. A NN lease is similar, but with the landlord responsible for maintaining the parking lot, grounds and, perhaps, roof. Starbucks’ leases are often like this, but usually have a long term roof warranty as well.

Finally, as a share or token holder, you have no responsibility beyond your investment with RealyInvest. As you think about your financial goals, think about this kind of commercial real estate-thanks to RealyInvest it’s no longer exclusively the province of the rich.