Beginning in 1998 and continuing to the present, Coulter Adams has managed a real estate portfolio consisting of commercial, industrial, and R & D properties in California, Idaho, Iowa, Utah, and North Carolina. In addition to the above, the portfolio held title to a 120 unit multi-family apartment complex for which Coulter was the Managing Partner. As Managing Partner Coulter Adams has worked with such tenants as Wells Fargo Bank, Hewlett-Packard, Applied Materials, SCP Global Technologies, FedEx, Roche Biomedical, MCI, GAF, and Xpedx. In this role Coulter has been responsible for strategic investment planning, budget forecasting, calculating rates of return, and the negotiation of refinancing and and re-leasing. As Managing Partner Coulter also was responsible for the coordination of all tenant improvements.

What is a Triple Net Leased Investment ?

A Triple Net Lease, also referred to as a Net/Net/Net lease, an Absolute Net lease, or a NNN  lease, referrs to a lease agreement wherein the tenant in addition to base rent is obligated to pay for real estate taxes, maintenance, insurance, utilities, and landscaping costs if any. In a Triple Net Lease rents on a per sq. ft. basis, are typically lower than a standard “gross rent” lease. In a gross rent lease the tenant normally pays a base rent and often, common area maintenance fees only. This leaves the landlord obligated for all operating costs, including taxes, maintenance, management, utilities etc.
NNN leased properties are most often single-tenant commercial, industrial, or office properties with long term leases. Commercial properties of this type are frequently leased to national or regional retailers such as Walgreen’s Drugstores, CVS Drugstores, Wal-Mart, Safeway, Family Dollar, Home Depot, Verizon Wireless, Costco, and FedEx.

Leases are most often for 10 years, often for 15 years and frequently 20 years. When contemplating an investment of this length the main derivative of value is not so much the real estate itself but instead the uninterrupted cash flow created by what’s often an referred to as an “investment grade” tenant. In this economic climate it’s essential the investor select not only a first rate location, but a tenant with staying power.  It’s becoming apparent that “value” retailers like Wal-Mart, Costco, Family Dollar, and Dollar General are succeeding where others may fail. In addition, it’s generally agreed that health care related retailers like Walgreens, Rite Aid, and CVS Drugstores are likely to be in position to take advantage of the needs of the expanding segment of the aging population.

In addition to Absolute NNN leases there are what’s known as Modified NNN leases , also known as Double Net or NN leases. These leases transfer most but not all, the financial responsibility to the tenant. Most NN or modified NNN leases obligate the landlord to maintain the roof and or exterior walls of the property. All other costs are conveyed to the tenant. Anything less than a Double Net (NN) lease requires even more of the cost of ownership to be paid by the landlord. In short, a NNN lease can be a desirable investment for an the investor seeking little or no management while at the same time ensuring the investor a stable long-term income stream.

Why don’t most corporations own their own buildings?

Probably the question most frequently asked question. The primary reason is that for large companies to invest what would be significant capital in real estate assets, simply does not make good business sense. If FedEx, Walgreens, Starbucks, or any of the other nationally recognized companies owned the thousands of locations they occupy their balance sheets would be weighed disproportionately with real estate. In doing so they’d be required to take on significant amounts of debt and would be committing capital that could otherwise be used to expand their “core” businesses. Additional considerations include their ability to: (a) write off 100% of the rent as a cost of operations, and (b) remain fluid in their business strategies by not having to buy and sell properties as their business needs change and markets evolve.

What about Financing?

In this economic climate the securing of financing is somewhat more challenging.  Lenders however are currently loaning up to 75% of the value of a property at rates never before seen. Loan rates are typically fixed for a period of 10 years with an amortization period of between 20-30 years. Given this fact Cash-on-Cash returns of 8% and up, are achievable.