Triple Net Lease
Also called: NNN lease, net lease, FRI lease
In a triple net lease the tenant pays property tax, insurance and maintenance on top of rent, leaving the landlord with a near-passive income stream. Cap rates are correspondingly lower because the cash flow is cleaner and more predictable. The risk concentrates in tenant credit: a 15-year NNN lease is effectively a corporate bond secured on a building, so the tenant's solvency is the investment.