Guides
What Is an NNN Lease
A definitional guide to the triple net lease, how it differs from gross and modified gross leases, and what expenses shift from landlord to tenant.
Service Overview
How this service works
An NNN lease, shorthand for triple net lease, is a commercial lease structure where the tenant pays not only base rent but also the three primary property level expenses: real estate taxes, building insurance premiums, and maintenance costs. The three Ns refer to these three net expense categories, and the term distinguishes this structure from other common commercial lease types.
A gross lease sits at the opposite end of the spectrum, where the landlord pays all operating expenses and the tenant pays a single flat rent figure that already accounts for those costs. A modified gross lease falls in between, with the tenant and landlord splitting responsibility for different expense categories based on whatever terms are negotiated into the lease. A single net lease, sometimes called an N lease, has the tenant paying only property taxes in addition to rent, while a double net lease, or NN lease, adds insurance to the tenant's responsibility along with taxes, leaving maintenance with the landlord. The triple net lease is the most tenant responsible of these common structures, leaving the landlord with the fewest ongoing expense obligations.
Because the tenant bears responsibility for these costs directly, base rent under an NNN lease is typically lower than under a comparable gross lease, since the rent figure does not need to build in a cushion for expenses the landlord no longer pays. This makes comparing rent figures across different lease types misleading unless the comparison also accounts for which expenses are included in each rent number.
A related but distinct concept is the corporate guarantee, common in NNN leases signed by national tenants, where the parent company guarantees lease obligations even if the specific store location underperforms. This guarantee, when present, meaningfully strengthens the landlord's position compared to a lease guaranteed only by a local franchisee or a single purpose entity with limited assets behind it.
Denver, CO investors reviewing an NNN lease as part of a potential purchase should read the actual lease document rather than relying on a summary, since the specific allocation of expense responsibility, and the presence or absence of a corporate guarantee, can vary even among leases marketed under the same NNN label.
Service Details
What is included
Comprehensive support to keep your exchange compliant and on schedule.
Definition of the three expense categories covered under a triple net lease
Comparison of gross, modified gross, single net, double net, and triple net lease structures
Explanation of how expense responsibility affects base rent pricing
Explanation of corporate guarantees and their effect on lease strength
Guidance on reviewing actual lease documents rather than summaries
Framework for comparing net income across different lease structures
Common Scenarios
When this service helps
A Denver investor is comparing an NNN lease property against a gross lease property and wants to understand the rent differences.
A Colorado Springs investor wants to confirm whether a specific lease carries a corporate guarantee before purchasing.
A Boulder investor is reviewing a lease document to determine which expense category it actually covers.
Example Project
NNN Lease Structure Guidance
Example of the type of engagement we can handle
Client Situation
Investor in Denver is evaluating a property marketed as NNN leased and wants to confirm the actual expense allocation and guarantee structure before making an offer.
Our Approach
We review the lease document line by line to confirm which expenses the tenant covers, identify whether a corporate guarantee applies, and compare the net rent figure to other lease structures under consideration.
Expected Outcome
Investor has a clear, verified understanding of the lease's actual terms before committing to a purchase.
Educational content only. Not tax, legal, or investment advice. A 1031 exchange defers income tax on qualifying real property and does not remove transfer or documentary taxes.
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Common Questions
Frequently asked questions
What do the three Ns stand for in an NNN lease for a Denver, CO property?
The three Ns refer to the three expense categories the tenant pays in addition to base rent: property taxes, building insurance, and maintenance costs. A tenant covering all three, rather than one or two, is what distinguishes a triple net lease from a single net or double net lease.
How does an NNN lease differ from a gross lease for a Denver, CO investor?
Under a gross lease, the landlord pays operating expenses out of a flat rent figure. Under an NNN lease, the tenant pays those expenses directly in addition to rent, which typically means the base rent figure itself is lower than a comparable gross lease rent, since it does not need to cover those costs.
What is a corporate guarantee on a Denver, CO NNN lease property?
A corporate guarantee means the tenant's parent company backs the lease obligations, providing an additional layer of financial support beyond the specific store location's performance. Leases with a strong corporate guarantee are generally viewed as lower risk than leases guaranteed only by a local operator or a limited asset entity.
Should a Denver, CO investor compare rent figures directly across different lease types?
Not without adjusting for expense responsibility. A higher rent figure under a gross lease may represent similar net income to a lower rent figure under an NNN lease, since the gross lease rent already includes an allowance for expenses the landlord pays. Comparing net income after expenses gives a more accurate picture than comparing headline rent alone.
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