What is a 'triple-net lease' (NNN) in commercial real estate?
Correct Answer
A) A lease where the tenant pays base rent plus property taxes, property insurance, and common area maintenance costs
A triple-net (NNN) lease requires the tenant to pay base rent plus three categories of property expenses: property taxes, property insurance, and common area maintenance (CAM). This shifts most operating costs from the landlord to the tenant.
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A commercial lease contains a 'rent escalation clause' that ties annual rent increases to changes in the Consumer Price Index (CPI). In a year when the CPI increases by 4 percent, what happens to the tenant's rent?
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A shopping center landlord requires a percentage lease clause from a major department store anchor tenant. The anchor tenant negotiates a natural breakpoint. What is a natural breakpoint?