1. SAME YIELD, DIFFERENT RISK

Two single-tenant retail buildings can both be marketed as NNN at the same 6.8% cap rate, yet split roof, structural, and casualty obligations between landlord and tenant very differently.
Where a lease sits on the net lease spectrum determines how passive and predictable the income really is, a factor that tends to get less attention than the headline yield.

2. THE NET LEASE SPECTRUM

Single net: the tenant pays rent plus property taxes. The landlord keeps insurance and maintenance, making it the least passive option.

Double net: the tenant adds insurance. Maintenance, often including roof and structure, stays with the landlord.

Triple net: the tenant pays taxes, insurance, and maintenance, but roof and structural repairs often remain with the landlord unless the lease says otherwise.

Absolute net (bondable): the tenant carries everything, including roof, structure, and rent after damage or
condemnation. It is the most passive structure and leans hardest on tenant credit.

3. LOOK PAST THE LISTING LABEL

Net lease terminology is not standardized. An “absolute NNN” property may hide landlord carve-outs in an amendment, and an “NNN” listing may leave the costliest repairs with the owner. NAIOP guidance points to the lease language itself as the real driver of risk.
The reliable method is to read the lease and every amendment, then build an obligation matrix assigning taxes,
insurance, maintenance, roof, structure, HVAC, casualty, and condemnation to either landlord or tenant.

4. PRICING, CREDIT, AND TAKEAWAYS

Absolute net properties with strong-credit tenants tend to trade at tighter cap rates, so investors pay more for the same yield when the structure is cleaner. CRE Daily reports net lease pricing increasingly follows risk, lease term, and tenant credit rather than interest rate moves.
Tenant credit matters more as obligations shift to the tenant. A national investment-grade tenant and a single-unit franchisee at the same cap rate are very different propositions.
The label on a listing is marketing language. The executed lease and its amendments are the only dependable record of what a buyer would own.
SVN Advisors evaluate net lease acquisitions from the executed lease, build the obligation matrix, and test tenant credit against the structure, supported by a network of 200+ offices.

SUMMARY OF SOURCES

(1) https://www.credaily.com/briefs/net-lease-market-stabilizes-as-risk-based-pricing-takes-hold/
(2) https://www.naiop.org/research-and-publications/magazine/2024/spring-2024/marketing-leasing/strategic-approaches-to-mastering-triple-net-lease-properties/