No Direct CRE Ownership Is Completely Hands-Off. NNN Sale-Leaseback Investors Need a Plan to Protect the Value of Their Assets.
By Robert L. Knight, AIA, LEED AP | Published Dec. 3, 2024 on GlobeSt.com
With the rise of triple net (NNN) sale-leasebacks, many investors with little or no commercial real estate (CRE) experience jump on the opportunity to buy a cash-flowing asset occupied by a national credit tenant on a triple net lease. Unfortunately, without CRE expertise, these investors may not recognize the risks involved in this seemingly hands-off investment model. As with any investment, proper due diligence and a risk management plan can reduce exposure in an NNN sale-leaseback transaction and increase the likelihood that returns will match projections.
The NNN Sale-Leaseback Model: What Could Go Wrong?
With even less active participation required than a passive franchisee role, investing in NNN sale-leaseback real estate offers the allure of monthly income without touching business operations managing the real estate are greatly reduced. If everything goes according to plan, the tenant maintains the building, pays rent to the owner, and at the end of the lease term, either renews or vacates.
In this Globe St. article, Robert L. Knight, AIA, LEED AP discusses how engaging a consultant can help protect cash flow and capital while enjoying the hands-off ownership experience.
