U.S. COMMERCIAL

TRIPLE NET LEASE

PROPERTY

Triple Net Single Tenant Leased Commercial Real Estate.

Guaranteed Income by a well known Corporation.The property is being promoted as a fourth asset class in an optimal portfolio, particularly for older investors more interested in monthly check returns over long term capital gains. Even smaller investors are now being allowed into an area once dominated by real estate investment trusts and other institutional groups. As many investors are looking for a safe place to put their money with the wild fluctuations in the financial market.

Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, net-leased properties, which many investors also call a corporate bond, combined with real estate investments that still make sense today.

Net Leased Properties usually are located in superior locations, therefore the residual value of the real estate is usually very good.

Net Leased Properties can relieve you from management headaches associated with other types of income real estate.

Triple Net leased properties, guaranteed by good credit are ideal exchanges for individuals who want conservative investment property with steady, long-term income but without responsibility.

Who can invest in single-tenant, net-leased properties?

Net leased properties are appealing to a wide variety of buyers, from high net worth individuals to partnerships to large institutional investors like real estate investment trusts, life insurance companies and pension funds. Net leased properties also are very attractive to investors who need to do 1031 tax-deferred exchanges, or 1031 exchanges for short.

What are the benefits of investing in single-tenant, net-leased properties?

Many people consider single-tenant, net-leased properties as bond-like investments because of their stable, predictable returns. Because tenants commit to long-term leases, there’s very little re-leasing risk. Moreover, single-tenant, net-leased investments can be tailored to an investor’s risk-reward expectations by choosing tenants with different credit profiles.

For example, some tenants are rated by national credit ratings agencies while other tenants have only their previous financial performance to recommend them.

When is the best time to invest in a single-tenant, net-lease property?

Net-leased properties are like all-weather tires. They are good investments in both good and bad economic times and in hot and cold real estate markets.

Here’s why: A single-tenant net lease is guaranteed by a long-term lease at pre-set rental rates. As an owner, you know exactly who will be a tenant in your building, how long that tenant will be there and exactly how much rent they will pay you. That means you will derive a steady income from your investment, regardless of how the economy or real estate market is performing.

These types of properties mostly occupied by national pharmacy and restaurant chains or even doctors’ offices are currently outperforming other commercial real estate sectors such as office, industrial and hotel. The returns are better lately than theses for commonly acquired stocks, which have performed negatively over the last decade.

Advantages Aplenty

An upcoming report by in the USA shows that triple net lease capitalization rates have stabilized at just above 8% in recent years, similar to REIT returns. Compare that with equities, which have brought a negative 2.7% return since 2000 or Treasuries, which have basically dried up in the new millennium. As investors turn to fixed and passive income vehicles, they have gone into bonds in record numbers, putting at least 90 billion into bond mutual funds earlier this year in the USA. Cogan Commercial reports in the USA, the typical moderate investment portfolio may put 65% of assets into equities, 30% into bonds and 5% into cash, and converting 20% to 30% into net lease properties at times when other markets don’t perform as well. Also high credit tenants such as Walgreen Co. and McDonalds Crop, are far more likely to honor long term lease obligations whether the economy is good or bad. More importantly, investors can see and enter what they bought practically anytime, whether it’s a local asset or one clear across the county. While triple net lease owners should look on their properties at least once a year, Cogan Commercial do offer to do this in long distance situations. Triple net lease are ideal for high net worth investors who prefer passive income, generating re investment income and providing tax benefits with little to no responsibility. It’s also good for estate planning purposes, since properties can easily be passed on to heirs.

How are single-tenant, net-leased investments different from multi-tenant buildings?

Multi-tenant buildings have more than one tenant, and as a result, owners and landlords must juggle multiple leases that begin and end at different times. These leases are rarely longer than seven years. That means that the building’s financial performance is vulnerable to the ups and downs of the market.
Many net-lease investors have previously owned other types of real estate but are looking for an investment that requires less maintenance and supervision. For example, many apartment investors end up selling their high-maintenance properties and then reinvesting the sale proceeds in single-tenant, net-leased retail properties, as do many land owners who have previously never received any income or tax benefits from their property.

What is a single-tenant, net-leased investment?

A single-tenant, net-leased investment is typically a freestanding office, retail, or industrial building that is leased and occupied by one user or one company. Typically the tenant has committed to a long-term lease – usually longer than 10 years, and as long as 25 years with increasing rent over the lease term.

What is a net lease?

There are different types of leases for commercial property in the U.S. The two most common leases are full-service leases and net leases. A full-service lease means that the tenant is paying one base amount to the landlord/owner to occupy the space and the owner pays all the expenses related to the building including insurance and property taxes. With a full-service lease, the landlord/owner also is responsible for all maintenance related to the building. For example, if a thunderstorm damages the roof, the landlord/owner must pay for the repairs. In comparison, a tenant with a net lease is responsible for paying rent plus some or all of the operating expenses of the building such as taxes, insurance premiums, repairs, and utilities. Depending on how the leases are structured, they can be net-net leases or triple-net-leases. Specifically, in the case of a triple net lease, also known as NNN leases, the tenant agrees to pay all of the building’s operating expenses, real estate taxes and insurance.

How are single-tenant, net-leased assets valued?

Unlike traditional real estate investments whose valued is determined exclusively by the real estate itself, a single-tenant, net-leased property’s value is determined by a combination of factors including the tenant’s credit, the length of the lease and rental escalations over the term, and, last but not least, the real estate. In markets where the real estate experiences wide valuation swings, a single-tenant, net-leased property will maintain its value because of its bond-like, long-term lease and the credit tenant guaranty for the lease.

TYPES OF NET LEASES

Net Leases (N): Leases in which the tenant pays some share of expenses. The more net a lease includes, the less financial responsibility a landlord or owner has.

Net, Net Leases (NN): Means that the tenant is responsible for all operating expenses and real estate taxes. The owner or landlord is responsible for the roof and structure.

Net, Net, Net Lease (NNN): Means that the tenant is responsible for all operating expenses, real estate taxes and the roof and structure.

There are various forms of Net Leases and all have varying degrees of net aspects. The most desirable is commonly called a triple net “bond” lease, which adds protection for casualty and condemnation.

TERMS

NOI – Net Operating Income

CAP RATE – The Capitalized rate

MV – Market Value

NIM – Net Income Multiplier

The Net Operating Income

The Net Operating Income is calculated as follows:

NOI = All Income – All Expenses

The Capitalization Rate:

The Cap Rate is calculated as follows:
Cap Rate = (Net Operating Income / Market Value) x 100
Cap Rate = (NOI / MV) x 100

The Net Income Multiplier (NIM)
The Net Income Multiplier (NIM) is the inverse of the Cap Rate
NIM = 100 / Cap Rate
or Cap Rate = 100 / NIM

Here’s what you need to know about single-tenant, net-leased properties:

What are the risks related to investing in single-tenant, net-leased properties?

While there are very few risks related to investing in single-tenant, net-leased properties, tenants with non-investment grade credit profiles offer higher levels of risk. But that risk typically provides higher returns as well. And investors always need to think about the “re-leaseability” of a property if the net-tenant were to vacate the space.

EXIT STRATEGIES – WHEN I’M READY, HOW DO I GET OUT?

Real estate is not known as a “liquid” investment. That is, you cannot call up your broker, ask him to sell, and get a check in 6 days. You need to plan ahead and should not invest in any kind of real estate if you think you will need your investment out within less than a six month time frame. It is important to understand that in addition to the time it takes to market a property, there is time needed for inspections, due diligence, arranging financing and other closing matters. We will always do our best to expedite closing on your behalf, but experience has shown that a six month time frame is representative.

Tenants Pose Risk

Like any investment instrument of course there are risks, especially where the livelihood of tenants is involved. For example Blockbuster Inc, and Hollywood Video were once viewed as rock solid when people preferred renting movies on VHS and DVD but theses stores are closing as films butts move toward vending machines home mail services or direct to TV reception.

However even those concerns may be minimal. Cogan Commercial points out that most of these video shops were development in sound locations and buildings making them a good choice for other types of retailers demanding high visibility on heavily traveled streets. Once such property was recently released to a bank he says while another became a wireless phone showroom.

“It all comes down to real estate” Cogan Commercial says, nothing the industry’s constantly cyclical nature, Even if you buy the best credit tenant, you always want to have the best location.

Golfhomes is a lifestyle sale site specifically aimed at those of us who like the security of purchasing a property in a proven area of value and the peace of mind to own property in a location of proven security and outstanding beauty.

Our properties are fully maintained and managed all day every day so give us a call now and allow us to help you to a better walk of life.

We have up to date knowledge of what is for sale or lease at any given time – what is under construction, at early development stage or close to completion.

We also know what is in the pipeline for future development long before it becomes public knowledge and continually monitor both the city and county planning process.

We deliver the very best local knowledge all with a personal service and would welcome the opportunity to discuss your needs. We will do our very best to help you. Barry Cogan Auctioneers is a licensed and bonded firm of Auctioneers and Estate Agent.

We provide a confidential, professional and personal service to those wishing to purchase property and land in Cork and the rest of the World. Our consultants are highly-trained professionals with a detailed and comprehensive knowledge of this, one of the most attractive parts of the country.

We have a comprehensive computerised database of potential buyers waiting to purchase almost every conceivable type of property, whether it’s a restoration project, a castle or a bungalow.

Standard Conditions For Sale & Leasehold Property:
Note – The following particulars are given on the understanding that they will not be construed as part of a contract, conveyance or lease. Whilst every care is taken in compiling information, we can give no guarantee as to the accuracy thereof and enquirers must satisfy themselves regarding the description and measurement.

Google is to purchase Dublin’s tallest commercial office block, the Montevetro building, for €99.9m.

A LEASE AUDIT

Eliminating Billing Errors, Oversights and Mistaken Overcharges

Lease Auditing Service Are Often Overlooked

A Money Saving Strategy For Business

Do you currently lease or own Retail, Office or Industrial space and pay management charges or is your lease coming up for review. Did you ever wonder if you were getting the maximum value from the terms of your lease?  If you answered yes to one or more of the above, you need to have your lease audited. We at Cogan Commercial are here to personally ensure that your business is not overcharged. We will audit your lease to help you to successfully manage a reduction on your property occupation costs.

What is a Lease Audit?

A Lease Audit is a step by step examination of,All documents associated with the lease.The measurement of space.The interpretation of lease language.

Lease auditing is a standard control procedure.  A lease audit is an examination of all charges to determine whether they are consistent with the lease. It also compares billed amounts to lease provisions to ensure the tenant is not overpaying its rental obligations. Lease audits are an integral and essential component of due diligence when purchasing a business. Lease audits apply to office, retail, industrial, self storage and any other type of property where charges apply.

At Cogan Commercial we review all aspect of a commercial lease such as.

Excessive management fees, Excessive administrative fees, Improper calculation of association dues

Improper inclusion of unrelated costs, Pro rata share of cost miscalculations, Charging of excluded costs

Improper charging of capital expenditures, Incorrect calculation of savings for allowable cost

Misallocation of costs among buildings, Failure to tender service agreements, Charging above-market fees for non-arms-length services, Improper allocations of expense pools, marketing fund charges.

Base Rent

Per square foot rent miscalculations, Rent review miscalculations, Rent commencement errors.

Space Measurement

Use of incorrect standard for the building’s classification, Improper inclusion of exterior building areas

Measurement to incorrect interior surface, Mismeasurement of rentable and common areas.

Rates- Failure to apply rates refunds, Failure to pursue rates consistently from year to year, Improper inclusion of landlord rates, Improper inclusion of water rates, Failure to properly account for costs of auditors.

Electric and Other Service Charges

Misapplication of rates, Use of incorrect rate schedules, Addition of surcharges to utility costs

Wiring of meters to unrelated spaces, Misreading of meters, Miscalculation of multipliers

Incorrect assumptions as to usage, Incorrect counting of equipment for surveys, Failure to properly notify tenant of survey results.

We Also Audit,

Getting Started

Step 1: Contact our office at 021-4965432

Step 2: Provide Cogan Commercial with a Pdf (not a hard copy) copy of your lease and bills .

Step 3: Cogan Commercial will report back to you with an assessment and recommendations.

For more information please contact Cogan Commercial on 021-4965432  or  e-mail – info@cogancommercial.com – www.cogancommercial.com

Savings are self financing so for a confidential consultation contact Barry directly on 086 8168696. Let us help you how to reduce the costs and improve control over your company’s properties portfolio. We have audited many leases and have the proven experience to know what to look for, what to avoid, and how to apply the right resolution strategy to achieve a recovery.

Our Mission is to ensure that your businesses is not overcharged

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Google buys Dublin’s tallest office building

Google is to purchase Dublin’s tallest commercial office block, the Montevetro building, for €99.9m.