You've come to the right place to find out and put your fears at peace. Many different elements must be considered when considering Triple Net leases, from terminology definitions and acronyms to the benefits and drawbacks and the many obligations that must be taken care of by the various stakeholders involved in these investments.

In this article, we will discuss each of these aspects. Find out whether investing in triple Net lease for sale is a wise financial choice.

What does nnn mean?

nnn refers to an acronym for "Net Net, Net," derived from the distinction between net and net revenue. If you can net your expenses, you'll get the term Triple Net lease, or nnn lease often referred to as Net Lease.

Each of these "Nets" refers to specific expenses paid by the tenant, not the investor. The acronym TIM is used to recall the meaning of nnn means:

T refers to taxes, particularly the real estate taxes that the tenant pays on this nnn property. It is for insurance. It includes property insurance for the building and risk insurance on the whole property.

nnn Leases: What are the benefits for Investors?

The advantages that come with nnn leases to real estate developers are many. Triple Net investments provide investors with a reliable cash flow and income stream without paying expenses because the tenant takes care of the costs.

Investors also benefit from the certainty and security which comes with leases in the long term. You don't need to be concerned that your tenant might suddenly move out and you are left redesigning the space while you have to locate a new tenant fast.

nnn leases typically last for 10 or 15 years or up to 25 years. This means you can count on passive income throughout the lease. If the tenant is financially stable throughout the lease, it is an assured investment for several years.

In addition, If you have a creditworthy and reliable tenant, they'll typically mail you a check five to 10 days before the start of every month or pay the cash directly into your bank account using autopay.

How nnn Investing works?

nnn (Triple Net) investing is based on an investor on his own purchasing an investment property in commercial real estate that only one tenant normally occupies.

After you've determined the type of property you'd like and the area you'd like to locate, You must also decide on the kind of business sector or industry you prefer and the tenant's creditworthiness.

It is important to choose an industry you are confident will remain for a long time since Triple Net leases are long-term investments. If, for instance, you're thinking of purchasing a McDonald's, then you could seek one in a particular region (fast, fast food restaurants, often known as Quick Service Restaurants or QSRs, comprise the largest portion of Triple Net leases on the market).

The great thing about net lease for sale is that you're not bound to buy only within your local area. Since McDonald's operates as an international business, it is possible to purchase McDonald's anywhere in the nation and even globally.

The specially trained "Net Lease" real estate brokers can assist you in finding properties to purchase. After locating several McDonald's deals, you can make an offer to purchase the property.

Because the lease agreement is already in place and signed, it is possible to immediately begin getting monthly rental income, just doing administrative work. You will not have to worry about leasing or building operations.

The main difference between nnn and, for instance, purchasing an apartment building is that you will be accountable for hiring or managing the manager to take care of the building.

You're responsible for tenant complaints in multifamily apartment buildings such as toilets, termites, and toilets. However, with the Triple Net lease, you do not have to handle all of those.

And, if you can pay for the lease, such as McDonald's corporate credit, you're entitled to Mail Box Money! Sometimes, you don't have to go to the post office since large companies will transfer the money into your account via the Automated Clearing House (ACH) payment. This means that you will need to be concerned about calling on doors to collect rent for a tenant.

NNN investments are fairly simple to manage once you have your property. It is important to ensure that you conduct market research, study the outlook for specific industries and select the most efficient tenant business models, look up tenants' credit scores and read the lease terms.

You can carry out the procedure yourself or invest through Net Lease industry experts, such as Liberty Real Estate Fund, which has developed a wide selection of nnn properties leased to vital commercial tenants in high-growth markets.

From 13 May 2020, estate agent’s offices were permitted open and to begin viewings, in line with social distancing guidelines. People were allowed to move home. The construction industry was also permitted to begin building again, in line with government guidance.

Despite such steps, many commercial premises are likely to remain shuttered for some time to come. Those that do reopen may expect significant falls in turnover. The lockdown precipitated by the coronavirus pandemic has already pushed some businesses over the edge. Even as the lockdown measures are slowly eased, many commercial tenants may struggle to meet their payments. Landlords and tenants alike are now grappling with a radically altered economic situation and struggling to understand how it impacts their commercial lease arrangements. Richard Osborn, a specialist commercial property and property development lawyer at Excello Law, parses the new measures and their implications below.

The emergency Coronavirus Act, 2020 protects commercial tenants from eviction should they miss a payment in the three months after the measures were implemented. This means that no right of re-entry or forfeiture for non-payment of rent may be enforced in a commercial tenancy until 30 June 2020, at least. This protection can be extended up to six months. Landlords and tenants will be expected to work together to establish an affordable repayment plan when this period ends.

The government has put in place a raft of measures to help businesses weather the coronavirus crisis. Commercial tenants can avail of UK government loans on attractive terms in order to pay rent. The government’s £330 billion business loan package announced by Chancellor Rishi Sunak was specifically stated to be available for businesses to “pay their rent, their salaries, suppliers or purchase stock”. The Bank of England’s reduction of interest rates to a record low of 0.1% may help make existing loans more manageable. The government’s VAT payment deferral is estimated to have provided businesses with £30 billion in cash flow relief. Crucially, the government’s coronavirus jobs retention scheme helps businesses retain furloughed staff, which will help them to get up and running quickly once they reopen.

The government’s £330 billion business loan package announced by Chancellor Rishi Sunak was specifically stated to be available for businesses to “pay their rent, their salaries, suppliers or purchase stock”.

Despite these measures, many now fear a permanently changed commercial reality across the commercial property sector. Landlords of office premises are concerned that the massive moves towards homeworking necessitated by the coronavirus pandemic have proven a remarkably successful experiment for many businesses. Some major employers now intend to ramp up homeworking on a permanent basis, which may imply a long term reduction in the demand for office space. Likewise, the recent vast shift to online shopping is a serious concern for the retail sector. Many expect customers to continue shopping online in greater numbers, even after the pandemic passes. Concerns that the coronavirus pandemic may be causing permanent tectonic shifts in the commercial property market have increased anxieties across the sector. On top of this, most economists believe that we are already in the early stages of a major global recession.

Given this radically changed commercial reality, it’s no surprise that some commercial tenants are now actively seeking to escape their leases. Unlike construction and commercial agreements, however, commercial leases rarely contain force majeure clauses. Some commercial tenants are seeking to rely upon the legal concept of frustration to escape their leases.

In law, a contract becomes frustrated when something happens which is not the fault of either party, but which strikes fundamentally at the root of the contract. This event must be beyond what was contemplated by the parties when they entered into the contract. Further performance of the contract must be rendered impossible, illegal or it must make the obligations radically different from those contemplated by the parties when the contract was entered into.

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Frustration brings the contract immediately to an end. Both parties are relieved of any of any unperformed obligations. The Law Reform (Frustrated Contracts) Act, 1943 stipulates that money already paid is normally recoverable. However, if a party to the contract has incurred expenses, they may charge them to the other party. If a party who has gained a valuable benefit under the contract must pay a fair sum for that. Otherwise, the contract is brought to an end.

Frustration may appear attractive as a clean way to end a lease. However, meeting the legal test for frustration is onerous. Each case will turn on its own facts, and will depend upon the impact of the crisis upon the performance of the contract. Frustration may be arguable in cases where leases have only a short period to run, and where the business requires physical proximity – such as a hairdressing salon, for example. But even then, much will depend on government advice as it evolves. The government has issued advice on how to operate businesses safely for England. However, this is open to interpretation in terms of how might apply in practice to a given business. Some tenants may argue that compliance is impossible and that their leases are therefore frustrated.

Most standard commercial lease agreements oblige tenants to comply with statutory notices issued by competent authorities. In such cases, where the lease also contains a “keep open” clause, which obliges tenants to keep trading, the tenant will nonetheless be required to comply with overriding statutory notice to close.

Frustration may be arguable in cases where leases have only a short period to run, and where the business requires physical proximity – such as a hairdressing salon, for example. But even then, much will depend on government advice as it evolves.

The position is more complex where a commercial tenant is not ordered to close, but where they decide to do so in order to protect staff or customers - perhaps due to their judgment that the premises does not enable government social distancing guidance to be met. In such cases, where there is a valid “keep open” clause, it is open to a landlord to argue that the balance of convenience lies in favour of the premises being kept open. However, cases seeking damages for breaches of “keep open” clauses are rarely successful at the best of times. The courts are likely to be sympathetic to businesses closing to protect their staff and customers in the context of the coronavirus pandemic.

In this time of uncertainty, it is best for landlords and tenants to communicate openly and to work together collaboratively to resolve any issues that may arise. However, when complex issues do arise, professional advice should be sought.

While it is a matter for their own commercial judgment, it may be advisable for landlords to agree rent reductions where appropriate, to help their tenants to survive the crisis. Keeping existing leases going in a modified form may be far preferable to seeking new tenants in what may be a very difficult market. After all, none of us knows what sort of economy awaits us on the other side of the coronavirus crisis, or when the crisis will pass.

When the hypothetical family from number 28 parade the street in their new Mercedes GLE, doing somewhat of a victory lap, Google is just seconds away as we scout our next big purchase.

Driving the car of our dreams just isn’t a feasible option for many, due to the reality of things like family life and other important household costs. But, as John Paul Getty once remarked, “if it appreciates, buy it. If it depreciates, lease it.” Many throughout the UK have taken the once-oil tycoon’s advice and done just that.

It’s a well-known fact that the value of a new car is known to drop massively within the first year, and research from AA suggests that after three years, a car will have lost 60% of its original showroom price tag at an average of 10,000 miles per year. The first-year loss is definitely the worst, with a deduction of around 40% being made by the end of the first 365 days. Obviously, there are different ways of putting the brakes on depreciation. Keeping the car clean, regular servicing in accordance with manufacturer’s guidelines, and one eye on the mileage gauge, will all go a long way in reducing potential losses.

But could we be doing something different?

PCP

An impressive 78% of buyers nowadays opt for a personal contract purchase (PCP), proving itself as an increasingly popular finance option. Admittedly, it goes against everything our parents have told us to do, in regard to owning our own car, but if you can battle those initial demons, then we’re here to show you why this might be for you.

Cost

Some people take pride in saving up in advance to buy a new car, like the Mercedes A Class, but not all of us have the time (or or patience!). With PCP, the payment is broken down into three major chunks. Firstly, you’ve got the initial deposit which is usually 10% of the car’s showroom value. Secondly, the monthly payments which will include enough to cover the depreciation costs incurred throughout the contract. Finally — and this is where things change once the final payment of the contract has been made, you get the option to either return the car or take a new one on a new contract. Or, you can pay a balloon payment and then the car is yours.

The monthly repayments of a PCP contract are significantly less than the alternative finance deals available. The option then presents itself is to drive a car that you would initially have deemed to be significantly out of your price range. Therefore, if you don’t have a big deposit and want lower monthly repayments, then this might be exactly what you’re after.

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Mileage

Heavy traffic, congestion charges and the worst culprit of all — parking. Three reasons many drivers in the UK have steered away from the daily commute in the car and opted for public transport. A decade ago, our decision when purchasing a car will have depended hugely on our day-to-day usage — but when that isn’t the same, why should the choice be?

On average the annual mileage of a car in the UK is 7,900. One drawback of renting your car through PCP is that is that when initially taking out the contract, you are given a mileage restriction and if you exceed this, you will be penalised. If, however, you would consider yourself to be one of those average UK drivers, then PCP offers no qualms. The opportunity to purchase a new contract once your current one is up means you aren’t going to have spent your days driving around in an old car with high mileage.

The freedom that comes with PCP means that if you wanted to, you could buy a weekend car — unless of course you are using it to commute every day. When purchasing a new car outright, you are restricted by the constant reminder that you will have this car for the foreseeable future. With PCP, you can buy the car that caters exactly to the needs of your evenings and weekends. For example, an SUV if you go camping with the kids most weekends throughout the summer, or a two-door roadster, if your Sundays are filled by coastal runs. And, if your circumstances do change, you can simply exchange the car.

PCP agreements have revitalised the UK car market, as budgets grow increasingly tighter and people are constantly on the lookout for a good deal. For the past three years, the number of new car sales in the UK has stayed above 2.5million units per year, in comparison to 2011 when it was only 1.9million.

Top tier brands such as Audi, Mercedes, BMW and Jaguar Land Rover have all performed well under the system. This is due to the fact these cars hold their value better, and therefore depreciation is less, ultimately benefiting both dealer and driver. Mercedes reported a 100% upturn in UK sales since 2010.

A typical customer could be paying anywhere in the region of £100 upwards for lifestyle costs such as their phone bill and gym membership, so if dealerships are able to offer a vehicle at £99 a month, then they are making the cost seem more realistic for their customers — it’s near enough a no brainer!

Phil Sugden, Director at flexible workspace solutions provider, Portal Group, discusses below how the Managed Office Solutions concept has reduced the risk of capital expenditure for fast-growing companies when relocating offices.

In a rapidly evolving market place, businesses are often growing at an entirely unpredictable rate. While growth is one of the most highly valued characteristics of any successful organisation, it often causes logistical and financial challenges when relocating to a larger workspace under the traditional office lease and the serviced model.

Businesses that opt for the traditional lease model are highly restricted in terms of flexibility, fit out and capital expenditure, thus limiting future developments and changes. While the serviced model offers more flexibility, businesses still face limitations on how they can use the office environment to reflect their brand.

Selecting an integrated service offering, such as Managed Office Solutions (MOS), offers a ‘third way’ for businesses to relocate to larger premises. Using MOS, offices are tailored to the client’s exact needs with the added advantages of risk mitigation, the removal of capex requirements and contract terms to meet business planning horizons.

The typical challenge for a small business that has outgrown its existing premises is finding and setting up an alternative location with access to high-calibre talent in a short space of time. In addition, extensive lease lengths can restrict SMEs from finding a new workspace that is wholly suited to their growth strategy.

Historically, companies opting for the traditional lease model have committed to the security of lengthy 10, 15 or even 20 year leases. As business plans often change several times over lengthy lease terms, this certainty has come at a critical price of flexibility in an often volatile economic climate.

The contract lengths for MOS, however, typically range from 3-5 years and therefore enable companies that require a high number of workstations, to more closely align their accommodation requirements with their actual business needs, allowing them to expand or downsize as required.

When expanding under the traditional office lease, businesses are required to self-source and invest substantial capital expenditure in what would be a large, ‘from-scratch’ project. Outsourcing fit-out and facilities management providers when relocating offices can be a costly and time-consuming process.

In addition, the exit fees and dilapidation costs can present even the most well-established businesses with a weighty unnecessary expenditure at the end of a lease.

As a result, small to medium sized businesses are now viewing their office space requirements as a strategic component of their business plan, and thus opting for more flexible leasing options at a fixed price, with no additional costs.

Leases are rapidly becoming an outdated concept, and under more flexible workspace contracts such as Managed Office Solutions (MOS), agreements can be negotiated so they are based on inclusive managed contracts that are priced on a per workstation basis with no capital expenditure or risk.

By having a single cost for the property, facilities management, fit out and ongoing management, flexible methods like MOS remove what can be considerable associated upfront capital expenditure costs, while allowing business funds to be utilised more effectively on operational costs for the property itself.

Simply put, the new wave of shared offices options are allowing SMEs to not only access all the services they need at a cost-certain price, but to work within a flexible financial model that actively encourages their individual development and culture.

While the uncertain impact of volatile market conditions, and of course Brexit, remain to be seen, businesses of all sizes are having to adapt to become more flexible than ever before. Even the most well-established businesses with enough capital to sustain sudden expenses, are reviewing what were previously assured and predictable growth plans. Philip Sugden, Operations Director at Portal Group UK, explains more for Finance Monthly below.

A business’s property profile is one of the most costly financial investments to be made and over the years the associated fixed rental rates are amongst the standard steps taken in establishing a solid presence for your business.

That cost certainty however, came at a price of the flexibility that is now critical in the modern and reactionary market place.

New businesses are growing at an entirely unpredictable rate while some large established businesses are seeking the autonomy to customize a workspace to better respond to supply and demand. However, with office space at a premium, both large and SME businesses are finding it harder to find a premises that can fill their present and future without breaking the bank.

The possibility that you might need to expand, reduce, reallocate or relocate your workforce at the speed required, particularly for example in the contact centre environment, is extremely costly and entirely impractical under the traditional office lease.

Whether a business is expanding or simply relocating due to success or commercial needs, budgets can no longer be front-loaded into capital expenditure laden construction or leasing of properties.

When considering the growing need to balance financial flexibility with cost certainty in the UK, it’s also interesting to note that our leasing habits differ vastly from the norm abroad. For example, while companies here have traditionally committed to the surety of long 10, 15 or even 20 year leases, the average is closer to three years in the US or India.

While these short-term lets would be at odds with the business growth plans of most UK businesses, more and more businesses of all sizes are increasingly exploring more flexible yet capex-free models.

The likes of managed office solutions (MOS) financial packages, which combine property acquisition, workspace design, fit out, facilities management and supporting services, reflect the emphasis now being placed on financial flexibility and the more expansive use of fluid operating costs (opex).

With simple, streamlined systems and structured terms, business owners can invest their time, effort and money into their businesses, not bricks and mortar.

Simply put, the new wave of shared offices options are allowing start-ups and multinational businesses alike to not only access all the amenities they need at a cost-certain price, but to work within a flexible financial model that fosters their own unique growth and culture.

This new year, there is one question on the lips of business men and women around the UK: “Is now the best time to purchase commercial property?” Thus, commercial property experts, Savoystewart.co.uk, have analysed how the market faired in 2017, and whether 2018 is the ‘peak time’ to buy.

The latest Property Data Report shows that since 2000, the value of the UK’s commercial property stock has grown, considerably, at an average of 3% each year – surprisingly, more than RPI inflation, which grows at an average rate of 2.8%.

Whilst exploring the report, Savoy Stewart found that the commercial property market in the UK in 2016 was valued at a staggering £883 billion, representing 10% of the UK’s net wealth. Investors now own £486 billion worth of commercial property in the UK; with overseas investors owning 29%.

In central London alone, around £2.4 billion was invested in commercial property, resulting in the total turnover for the end of July reaching a substantial £11.5 billion – a 24% increase on the same point a year earlier, in 2016.

July was the strongest month recorded for the City of London since March 2007, owing to the sale of the “Walkie Talkie” building – the UK’s largest single office building deal – which accounted for a staggering 61% of turnover.

Is now the best time to purchase commercial property?

2017 was a much stronger year than many ever anticipated. The economy pleasantly surprised many businesses and forecasters, with unemployment falling to the lowest level since 1975, consumer spending robust, and occupier take-up healthy.

According to Knight Frank, London office take-up is on the rise, despite the impact of Brexit, with demand in the West End at its highest for more than a decade. Savoy Stewart concluded, from their analysis of the research, that the third quarter of 2017 recorded the highest level of office take-up.

A substantial 3.8 million square feet of office space in central London was under offer and was due to close by the end of the year – and it is predicted to be the strongest final quarter since 2014. Office take-up in the West End alone reached 1.65 million square feet.

Trends in 2018

The uncertainty over the UK’s relationship with the EU will continue to cast a shadow over economic growth throughout 2018, resulting in a more cautious outlook amongst investors across all commercial property sectors. As a result, activity may be subdued, but it doesn’t

mean investment will stop any time soon, as investment volumes in the UK commercial property market, this year, are expected to total around £55 billion, per a report by JLL.

Savoy Stewart considered Savills ‘Sector Outlook’ and summarised the six main trends for commercial property in 2018:

1. Non-domestic demand for UK commercial property to remain strong; Due to the weakening of the pound and commercial property yields looking high in comparison to prime European and Asian markets.
2. Now is the best time to add value, and for opportunistic investors; Less competition and falling prices means now is the best opportunity to value-add and for opportunistic investors looking to change short-term income into long-term.
3. Real earnings growth will improve for the retail market; In 2017, a perfect storm of negativity hit retail, but this year will better news. Watch out for good buys in some segments of the commercial property market – don’t just buy because it’s cheap.
4. Brexit: It will become clearer how much, where and when the risks will be. London’s office market shrugged off the worst of the pre-Brexit negativity last year; 2018 will see more balance.
5. 2018 will be the year of ‘alternatives’; The pace of recovery will be dictated predominantly by Brexit; investors this year will be exploring new opportunities in the market.
6. New-tech tools, such as AI, will emerge; Wellness and staff satisfaction will continue to be important for employers, but some businesses will start to look at offsetting the costs of delivering wellness by using artificial intelligence.

Managing Director of Savoystewart.co.uk, Darren Best, discusses his view on commercial property investment in 2018: “As the figures show, despite the uncertainty around Brexit, London is still a pre-eminent city and performing better than Europe in some sectors. The research suggests that now is the best time to purchase commercial property in the UK, now that business confidence is more stable than many expected, which speaks volumes.”

He added: “The performance of the market, last year, surprised many of us. Occupiers are continuing to commit to London commercial property to satisfy their needs, and with the increase in foreign investment in UK commercial property over the last decade and overseas investors now owning 29% of UK commercial properties, it is safe to say 2018 isn’t going to be all doom and gloom – there will be scope for optimism too.”