Triple net leases (AAA) allow commercial real estate owners to pass to their tenants most of the responsibilities for managing a property and paying all the related expenses. However, it is critical that property owners carefully calculate and record all the expenses covered under a NNN from the onset.
Generally, tenant expenses can be calculated by adding together property taxes, insurance and estimates of utilities and common area maintenance (CAM) and dividing that amount by the total square footage of the building. The result is the additional NNN price per square foot above rent that tenants will pay to the property owner each month. At the end of the year, an audit of expenses should be conducted to ensure accuracy and allow owners and tenants to reconcile any overpayment or shortfalls for that year and into the future.
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