Lease Structure
Double Net Lease (NN)
Triple net minus the roof and structure
A Double Net (NN) lease is similar to triple net but with landlord retaining responsibility for specific structural items — typically roof, structure, and sometimes HVAC replacement. The tenant still pays property taxes, insurance, and day-to-day maintenance. NN leases trade at slightly wider cap rates than absolute NNN because the landlord has some operational exposure.
Term
10-15 years initial + options
Rent Bumps
5-10% every 5 years typical
Cap Rate
5.75% - 7.0% typical
Tenants
National retailers with older lease structures
Who Pays What?
| Expense | Tenant | Landlord |
|---|---|---|
| Property Taxes | — | |
| Insurance | — | |
| Day-to-Day Maintenance | — | |
| Utilities | — | |
| Roof Replacement | — | |
| Structural Repairs | — | |
| HVAC Replacement | — | |
| Parking Lot Repairs | — |
Pros
- +Wider cap rates than absolute NNN (higher current yield)
- +Landlord maintains property value via roof/structural investment
- +Common structure for older chains with established leases
- +Still mostly passive compared to gross leases
Cons
- −Capital calls when roof/HVAC needs replacement
- −Less attractive to purely passive investors
- −Budgeting for cap ex required
- −Some buyer friction vs. absolute NNN at resale
Common Use Cases
How It Compares
NN sits between absolute NNN (tenant pays everything) and modified gross (tenant pays less). The key distinction is that the landlord retains capital responsibility for roof, structure, and sometimes HVAC.
Investor Perspective
NN leases are a compromise between yield and passivity. Investors who want slightly higher cap rates and are willing to plan for roof/HVAC capital needs often find NN attractive. Underwrite a reserve of 2-4% of rent annually for structural capex.
Other Lease Types
Ready to Invest in Double Net (NN)?
MaxLife Development sources commercial real estate across Florida with the lease structures that match your investment strategy.
Get in Touch