Glossary
The words on the tape.
- NNN (triple net)
- The tenant pays base rent plus property taxes, insurance, and maintenance. The landlord’s remaining exposure depends on the lease: roof, structure, and parking are often still negotiated. Read the form. Do not assume “NNN” means the landlord pays nothing.
- Absolute NNN
- The tenant takes taxes, insurance, maintenance, and ordinarily roof and structure. Confirm the clause. The label on a flyer is not the lease.
- Cap rate
- NOI divided by price. An asking cap is the seller’s math on the offering. It is not a closed sale and it is not a promise of the next buyer’s yield.
- NOI
- Net operating income used to quote the cap. On a true NNN deal it is often the rent, because the tenant pays the operating expenses. If the landlord still pays anything, that amount comes out before the cap is real.
- Single-tenant net lease
- One tenant, one parcel, a lease that passes operating costs through. The risk is that tenant, that lease, and that location. There is no diversified rent roll behind the check.
- Corporate guarantee
- Who is obligated if the store closes. A franchisee, a master landlord, and the public parent are different credits. The desk prints a guarantor only when the lease or guarantee names one.
- Ground lease
- The tenant leases the land and usually owns the improvements. Term, rent resets, and who owns the building at expiry decide the price. It is not the same instrument as a building lease.
- 1031 exchange
- Like-kind real property held for investment or business use can defer gain when a qualified intermediary holds the proceeds. Identify within 45 days. Close within 180 days. Deferral is not forgiveness. Boot and mortgage relief can make gain taxable.