Leases
Absolute NNN
Last updated
Also called: absolute triple net · absolute net lease
Absolute NNN goes further than a standard triple net lease by shifting roof and structural repair — items landlords typically retain even in NNN deals — onto the tenant. It is the most common structure in single-tenant net-lease investment sales: national credit tenants (drugstores, quick-service restaurants, dollar stores) sign long-term absolute NNN leases specifically so the landlord's return is bond-like.
Because the landlord holds no operating exposure, absolute NNN properties trade primarily on tenant credit and remaining lease term rather than on physical building quality, which is why cap rates compress for investment-grade tenants with 10+ years remaining and widen sharply as lease term burns off or for non-credit tenants.
A buyer's diligence still matters even though the landlord has no repair obligation: confirm the lease actually says "absolute" rather than just "NNN" (many leases labeled NNN retain roof/structure with the landlord), verify there is no landlord capex reserve requirement buried in the lease, and check for co-tenancy or kick-out clauses that can shorten the effective term.
Related
Terms that travel with this one
- NNN (Triple Net)A lease where the tenant pays base rent plus its pro-rata share of the three major operating costs — property taxes, insurance, and common area maintenance — leaving the landlord with reduced expense exposure.
- NN (Double Net)A lease where the tenant reimburses two of the three nets — property taxes and insurance — but not common area maintenance, which the landlord retains. CAM is the line that separates NN from NNN.
- Cap RateCapitalization rate — a property's net operating income divided by its purchase price or value, used as the primary shorthand for pricing and comparing income-producing real estate.
- Sale-LeasebackA transaction in which a property owner sells its building to an investor and simultaneously signs a lease to remain in occupancy, converting owned real estate into cash while retaining operational use of the space.
Last updated
Talk it through
Applying Absolute NNN to a real deal
Definitions get you to the right question. Send the deal and we will tell you how this term behaves in your market, ordinance and lease.