Single Tenant Net Leased Properties

WHAT IS A SINGLE TENANT NET LEASED PROPERTY?

A commercial property you own that is on a long term lease to usually a national credit worthy company that is providing the investor with a passive investment and attractive return as compared to other real estate investments.

More and more investors have become familiar with the ease of owning commercial properties that are occupied by local, regional and national credit rated tenants leasing under a triple net long term lease.  The advantages with this style of lease is the tenant is obligated to pay for all expenses associated with the operation of the property including property taxes, maintenance, insurance, etc.  When this situation is combined with a National Credit Tenant the investor can be assured of a management free property with a minimum of risk.

WHY BUY NET LEASED PROPERTIES?

  • Guaranteed income by a well know corporation.
  • Sometimes financing is in place on net leased properties which can be assumed to meet the debt/equity requirements of Section 1031.
  • New financing is usually available from a variety of commercial lenders on a variety of terms and conditions.
  • Equity can be refinanced tax free after a 1031 Exchange is complete.
  • Net leased properties are often located in superior locations usually resulting in a residual value with good potential.
  • Net leased properties can relieve you from management and maintenance headaches resulting in a passive investment with attractive analytics.

 

WHAT IS A SINGLE TENANT NET LEASED PROPERTY?

Net leased properties are usually single-tenant commercial, industrial or office properties with long term leases backed by corporate credit. These leases usually obligate the tenant to provide for real estate taxes, insurance and building maintenance.  Such tenants are Walgreens, Miller Paints, Federal Express, Pizza Hut, etc.  Net leased properties, guaranteed by good credit, are ideal exchanges for individuals who want conservative investment property with steady, long-term income, but without responsibility for rental or day to day management.  Historically, these properties have generated an annual “cash on cash” return of 8 to 10 percent, and when leveraged with a self-amortizing loan have generated an internal rate of return of approximately 15 to 17 percent.