Risks Associated with a Triple Net Property
- The tenant competes with Amazon
- The tenant doesn’t perform well in a recession or pandemic
- The guarantor isn’t financially strong enough to honor the lease
- The lease is guaranteed at the unit, not the corporate level
- The guarantor doesn’t have an investment-grade credit rating
- The tenant has “rent holidays” or “out clauses” (weasel clauses)
- A short length of the lease
- There are no rent bumps during the initial term
- There are no rent increases at each option period
- The population within the properties service area isn’t sufficient
- The population isn’t stable or expanding
- There aren’t enough vehicles per day passing the store
- The property doesn’t offer a superior net return compared to other options
- The size and layout makes the store difficult to re-tenant the property if necessary
