Contract Law
Definition
A triple-net lease is a lease agreement where the tenant is responsible for all property expenses, including taxes, insurance, and maintenance.
A triple-net lease (NNN lease) is a commercial real estate lease structure where the tenant assumes responsibility for all the ongoing operational expenses related to the property, in addition to paying the base rent. Specifically, these expenses consist of property taxes, insurance premiums, and maintenance costs, including repairs and upkeep of the building and grounds. This lease type shifts a significant portion of financial risk and property management duties from the landlord to the tenant. For industrial real estate, such as logistics warehouses or manufacturing facilities common in the CEE region, the triple-net lease provides transparency and predictable cash flow for property owners. It enables landlords to operate with reduced variable expenses and administrative burdens, while tenants gain operational control and can directly manage property-related service costs. Due to clear expense allocation, NNN leases are favored by investors and asset managers looking for stable, long-term income streams with minimal management overhead. However, tenants should budget carefully for variable costs, as they bear all property-related financial obligations beyond the rent. This lease model suits single-tenant industrial properties where tenant durability and creditworthiness are crucial for long-term partnerships.
Practical Example: IPEC Group
At IPEC Group, triple-net leases are often integrated into our industrial and logistics developments in Slovakia and across the CEE region. For instance, in our flagship logistics park near Bratislava, tenants leasing large warehouse units enter into NNN agreements where they cover all operating expenses such as building maintenance, insurance, and local property taxes. This arrangement permits IPEC to offer long-term, fixed base rents to investors, ensuring steady income, while tenants benefit from operational control and transparency over costs that directly impact their supply chain efficiency. Such leases have proven effective in securing financially strong tenants and optimizing asset management in our portfolio.
Related Terms
Net Lease, Gross Lease, Property Management, Lease Agreement, Commercial Real Estate