subject: Single Tenant Net Leased Properties [print this page] Single tenant net leased properties are defined as those that are freestanding retail, office or industrial buildings that are occupied and leased by one person or by a single company. Usually, tenants in this situation commit to a long term lease, sometimes up to 25 years in length. Also, over the length of the lease, the amount of rent that the tenant pays increases. There are a few different types of agreements like these, two of which are full service leases and net leases these are the two most common types.
Starting with single tenant net leased properties, these are those in which the tenant is responsible for paying their rent in addition to much of the operating expenses of the building. These usually include repairs, utilities, taxes and sometimes insurance too. These properties are different from properties that have multiple tenants. With several tenants, land lords and owners have to juggle all of the contracts that end at different times. These contracts are not as long in duration as the single lease contracts are. Usually they are limited to a term of a maximum of seven years. The propertys financial performance is vulnerable to the fluctuations of the market.
There are some benefits that go along with single tenant net leased properties as opposed to having multiple tenants. Many people think of the single leases like bonds, because for the most part they offer steady, predictable returns. Part of this is because of the long duration that tenants are committed to, which means that there is a lower risk with long term leases being renewed. These investments can be altered to meet the investors expectations about the kind of profit he is looking for; he can choose tenants that only have good credit profiles, for example.
There are also some risks that are associated with single tenant net leased properties though. Just like anything else, those tenants who have lower credit scores and profiles may present a higher risk. On the other hand, higher risk tenants can be charged a higher rent, which means higher returns for the land lord. If a person or company were to suddenly break the lease and vacate their space, the owner needs to think about the risk they would face when they would have to lease it to someone else.
There are several properties available for consideration in all kinds of markets, different economies in all kinds of locations. These single tenant net leased properties are guaranteed by those long term leases and owners can enjoy a long term contract for income that is steady and stable.
