Accounting

Triple net lease (NNN)

A commercial lease in which the tenant pays base rent plus its share of property taxes, insurance and maintenance.

In an NNN lease, the three nets are property taxes, building insurance and common area maintenance. Tenants usually pay monthly estimates of these costs, followed by an annual reconciliation to actual costs.

NNN leases shift cost increases to tenants, which makes owner income more predictable. Managers of mixed-use and retail properties must track recoverable expenses carefully to bill and reconcile them correctly.

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