In one sentence
The distinction between leases where the landlord pays operating expenses (gross) and where the tenant does (net), shaping NOI analysis.
The longer version
Under a gross lease the landlord covers taxes, insurance, and maintenance; under a net lease the tenant reimburses some or all of these. Triple-net leases push nearly all of it to the tenant. The structure changes how NOI is calculated and compared.
Lease structure is a diligence point because it affects both the income and the expense sides of the underwriting.
Common questions
- What is the difference between a gross lease and a net lease?
- In a gross lease the landlord pays operating expenses from the rent. In a net lease the tenant pays some or all of them in addition to rent.
- What is a triple net lease?
- A lease where the tenant pays property taxes, insurance and maintenance in addition to base rent, leaving the landlord with relatively predictable income.
- Why does lease type matter to a lender?
- Because it determines who bears rising expenses. Net leases protect landlord income from expense growth; gross leases leave the landlord exposed.
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