Real Estate’s Triple Play: Single-tenant, triple-net leased assets are a relatively safe way for investors to access real estate without taking on management and operating costs
July 1, 2017 | by SHEILA HOPKINS | RealAssetsAdviser
Despite its many benefits, real estate is well known for a few specific characteristics that give private investors pause. Its illiquidity, management fees and high cost to diversify are a few of the most-often cited hurdles. Single-tenant, triple-net leased (NNN) assets, however, can mitigate many of these objections. These investments are stable, income-producing, low-maintenance, bond-like investments that also retain the growth and tax advantages of real estate.
Triple-net leased assets are particularly attractive to investors new to the real estate world because they act so much like fixed-
income investments. They provide annual rent growth, good current yield and long-term predictability of cash flows (sometimes as long as 20 years) that feels a lot like a bond. But investors also get the real estate advantages of property appreciation and tax benefits, plus the security of owning a hard asset as opposed to commercial paper. NNN real estate investing is a marriage of structure and function that would make Frank Lloyd Wright weep for joy.
“Triple-net lease is a comfortable jumping off point to other types of real estate,” says Chris Czarnecki, CEO at Broadstone Real Estate. “It’s often the first step toward more investing in real estate because it is an interesting in-between investment opportunity.”
