Key Takeaways:<\/h3>\n\n\n\n\n- Triple net leases (NNN leases) require nonprofit tenants<\/b> to take on property maintenance responsibilities.<\/li>\n\n\n\n
- Maintenance costs in NNN leases include routine repairs as well as recurring and non-recurring expenses<\/b>.<\/li>\n\n\n\n
- Understanding NNN lease maintenance<\/b> can help nonprofit tenants<\/b> effectively budget and plan for long-term property upkeep.<\/li>\n\n\n\n
- NNN leases incentivize tenants to maintain the property, leading to cleaner and well-maintained spaces.<\/li>\n\n\n\n
- Working with experienced professionals can ensure nonprofit tenants navigate the complexities of NNN lease<\/b> agreements.<\/li>\n<\/ul>\n\n\n\n
What Are NNNs and How Are They Calculated?<\/h2>\n\n\n\n
A triple net lease<\/b> (NNN lease) is a type of lease agreement in commercial real estate where tenants are responsible for paying their pro-rata share of expenses associated with common-area maintenance<\/b> (CAMs<\/b>), property taxes, and insurance. This type of lease structure places the financial responsibility on the tenant rather than the landlord.<\/p>\n\n\n\n
To calculate triple nets, the total expenses for the year are divided by the rentable square footage<\/b> of the building. The result is then divided by 12 to get the monthly amount. Tenants are required to pay their base rent along with the estimated monthly triple net amount. It’s important to note that the actual costs incurred may differ from the estimate, so a CAM Reconciliation is performed at the end of each year to adjust the payments accordingly.<\/p>\n\n\n\n![\"NNN](\"https:\/\/npcrowd.com\/wp-content\/uploads\/2024\/02\/NNN-Lease-1-1024x585.jpg\" "\\"NNN")
<\/figure>\n\n\n\nThis image illustrates the concept of NNN leases and how they are calculated. The rentable square footage<\/b> plays a crucial role in determining the tenant’s share of expenses. The larger the space, the higher the triple net amount.<\/p>\n\n\n\nWhat Do NNNs Cover?<\/h2>\n\n\n\n
Triple net leases (NNNs) specifically cover common-area maintenance<\/b> expenses, which encompass both recurring and non-recurring work performed on shared spaces and utilities within the property. These expenses are crucial for ensuring the proper upkeep and functionality of the common areas that all tenants benefit from.<\/p>\n\n\n\n
The coverage of NNNs can be divided into two main categories: recurring expenses<\/b> and non-recurring expenses<\/b>.<\/p>\n\n\n\nRecurring Expenses<\/h3>\n\n\n\n
Recurring expenses<\/b> included in NNNs typically consist of routine services and ongoing maintenance activities necessary to keep the property in good condition. Some common examples of recurring expenses<\/b> covered by NNNs include:<\/p>\n\n\n\n\n- Day-porter service<\/li>\n\n\n\n
- Property management<\/li>\n\n\n\n
- Trash removal<\/li>\n\n\n\n
- Electricity bills<\/li>\n<\/ul>\n\n\n\n
These expenses are recurring because they are required on a regular basis to ensure that the common areas are clean, well-maintained, and functioning properly. By including these expenses in the NNNs, tenants share the responsibility and cost of maintaining a pleasant and functional environment for everyone.<\/p>\n\n\n\n
Non-Recurring Expenses<\/h3>\n\n\n\n
In addition to recurring expenses, NNNs also cover non-recurring expenses<\/b>, which are typically associated with repairs and replacements for specific items within the common areas. These expenses arise from unexpected or infrequent needs and may include:<\/p>\n\n\n\n\n- Parking lot pothole repairs<\/li>\n\n\n\n
- Light fixture replacements<\/li>\n\n\n\n
- Sprinkler repairs<\/li>\n<\/ul>\n\n\n\n
Non-recurring expenses can vary depending on the property, but they are generally necessary for addressing maintenance issues and ensuring the safety and functionality of shared spaces.<\/p>\n\n\n\n
It’s important to note that while NNNs typically cover most common-area maintenance<\/b> expenses, the responsibility for certain costs may still lie with the landlord. For example, expenses related to the foundation, structural elements, and roof may be the landlord’s responsibility in some cases.<\/p>\n\n\n\n
By sharing the costs of common-area maintenance, NNNs create a fair and balanced arrangement that benefits all tenants.<\/p>\n\n\n\n![\"Common-Area](\"https:\/\/npcrowd.com\/wp-content\/uploads\/2024\/02\/Common-Area-Maintenance-1024x585.jpg\" "\\"Common-Area")
<\/figure>\n\n\n\n
What Are NNNs and How Are They Calculated?<\/h2>\n\n\n\n
A triple net lease<\/b> (NNN lease) is a type of lease agreement in commercial real estate where tenants are responsible for paying their pro-rata share of expenses associated with common-area maintenance<\/b> (CAMs<\/b>), property taxes, and insurance. This type of lease structure places the financial responsibility on the tenant rather than the landlord.<\/p>\n\n\n\n
To calculate triple nets, the total expenses for the year are divided by the rentable square footage<\/b> of the building. The result is then divided by 12 to get the monthly amount. Tenants are required to pay their base rent along with the estimated monthly triple net amount. It’s important to note that the actual costs incurred may differ from the estimate, so a CAM Reconciliation is performed at the end of each year to adjust the payments accordingly.<\/p>\n\n\n\n This image illustrates the concept of NNN leases and how they are calculated. The rentable square footage<\/b> plays a crucial role in determining the tenant’s share of expenses. The larger the space, the higher the triple net amount.<\/p>\n\n\n\n Triple net leases (NNNs) specifically cover common-area maintenance<\/b> expenses, which encompass both recurring and non-recurring work performed on shared spaces and utilities within the property. These expenses are crucial for ensuring the proper upkeep and functionality of the common areas that all tenants benefit from.<\/p>\n\n\n\n The coverage of NNNs can be divided into two main categories: recurring expenses<\/b> and non-recurring expenses<\/b>.<\/p>\n\n\n\n Recurring expenses<\/b> included in NNNs typically consist of routine services and ongoing maintenance activities necessary to keep the property in good condition. Some common examples of recurring expenses<\/b> covered by NNNs include:<\/p>\n\n\n\n These expenses are recurring because they are required on a regular basis to ensure that the common areas are clean, well-maintained, and functioning properly. By including these expenses in the NNNs, tenants share the responsibility and cost of maintaining a pleasant and functional environment for everyone.<\/p>\n\n\n\n In addition to recurring expenses, NNNs also cover non-recurring expenses<\/b>, which are typically associated with repairs and replacements for specific items within the common areas. These expenses arise from unexpected or infrequent needs and may include:<\/p>\n\n\n\n Non-recurring expenses can vary depending on the property, but they are generally necessary for addressing maintenance issues and ensuring the safety and functionality of shared spaces.<\/p>\n\n\n\n It’s important to note that while NNNs typically cover most common-area maintenance<\/b> expenses, the responsibility for certain costs may still lie with the landlord. For example, expenses related to the foundation, structural elements, and roof may be the landlord’s responsibility in some cases.<\/p>\n\n\n\n By sharing the costs of common-area maintenance, NNNs create a fair and balanced arrangement that benefits all tenants.<\/p>\n\n\n\n<\/figure>\n\n\n\nWhat Do NNNs Cover?<\/h2>\n\n\n\n
Recurring Expenses<\/h3>\n\n\n\n
\n
Non-Recurring Expenses<\/h3>\n\n\n\n
\n
<\/figure>\n\n\n\n
![\"Triple](\"https:\/\/npcrowd.com\/wp-content\/uploads\/2024\/02\/Triple-Net-Lease-Benefits-1024x585.jpg\" "\\"Triple")
<\/figure>\n\n\n\n