What is NNN Lease / Triple Net Lease?

Definition

A triple net lease (NNN) requires tenants to pay base rent plus their proportionate share of three categories of operating expenses: property taxes, building insurance, and common area maintenance. NNN leases shift the majority of operating cost risk from the landlord to the tenant and are the standard structure for commercial office, retail, and industrial properties. The annual reconciliation of these three expense categories is the core of CAM reconciliation. Because NNN leases pass through substantially all operating expenses, the accuracy of expense classification, allocation methodology, and billing calculations directly determines whether the landlord recovers what the lease entitles them to.