I have a lease proposal on my desk, presented by a broker, a “Senior Vice President” of a national brokerage company, on behalf of a prospective tenant, an international food company. The proposal states “Lease Type: The Lease type will be NNN.”
NNN or “Triple Net” in real estate parlance means that the tenant would pay all occupancy costs including taxes, insurance, utilities and maintenance (as opposed to a “gross” lease in which landlord pays some occupancy costs). Yet the so-called “NNN” lease proposal includes this language:
“…provided that Landlord agrees to be responsible for general building structure, foundation,
plumbing/electrical, roof and parking lot.”
Moreover:
“Controllable operating expense passthroughs…shall be capped in subsequent years at
an annual increase of 5% over prior year's controllable operating expense cap."
Further:
“Landlord shall warrant [the HVAC equipment] for sixty-six months [the entire lease term].”
In the spirit of the broker’s concept of a “NNN” lease, I would describe the broker’s work on the transaction over many months as CCC...with "gross" shortcomings.
Steven Karbank
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