A net lease REIT is a Real Estate Investment Trust that owns commercial properties whose leases require tenants to cover most or all ongoing operating costs, depending on the lease type (single-net, double-net, or triple-net). This structure can shift property-cost risk away from the owner and can influence cash-flow predictability.
Investors use net lease REITs to gain exposure to income-producing real estate with typically longer, predictable rent streams and defined escalations. Analysts evaluate tenant credit quality, lease maturities, occupancy, and geographic diversification, and they consider how the lease structure affects exposure to operating costs. Portfolios often emphasize property types with stable demand, such as industrial warehouses, regional shopping centers, or single-tenant offices, depending on the holdings.
Because tenants bear many operating costs under net leases, cash flows may be less sensitive to routine property expenses but still depend on tenant solvency and lease-rollover risk. Valuation tends to rely on cap rates, rent escalations, and credit metrics, with attention to lease type (N, NN, or NNN) and concentration risk in the portfolio.
A net lease REIT owns several industrial warehouses leased under triple-net terms to logistics tenants, with tenants paying rent plus taxes, insurance, and maintenance.
Real Estate Investment Trust (REIT) · Net lease · Triple-net lease (NNN) · Equity REIT · Tenant credit risk · Cash flow