Property for sale as NNN tenant.

The lease is 20 yrs with renewals every 5 yr at a X% higher. Does it mean tenant can leave in 5 yrs?
In Buying Property - Asked by Ashish M. - Jul 23, 2011
Report Abuse
Answer this Question

Answer(s)

Ron F.
Broker/Agent
Andover, MA

typically yes, but the integrity is based upon the actual lease wording.

Jul 23, 2011
Report Abuse
James B.
Broker/Agent
The Colony, TX

If the lease is for 20 years then the tenant is obigated for 20 years. The renewals follow the lease and the tenant at thier chosing can opt out before the renewal starts.

Jul 23, 2011
Report Abuse
Chris G.
Broker/Agent
Edison, NJ

A Lease Term of 20 yrs with renewals AFTERWARDS means a 20 yr commitment.

Jul 24, 2011
Report Abuse
Arvind N.
Owner/Investor
Orlando, FL

yes . tenant can choose to leave after 1st term. i.e 5 years.
please make sure you read your lease.
some leases provides automatic renewals and some requires notice to the owner to cancel and or renew.

Jul 24, 2011
Report Abuse
Chris F.
Broker/Agent
Salem, OR

This is going to depend on the wording of the lease, as you can see, you have a 50/50 split on answers and until you know the exact wording of the lease it is a shot in the dark. A 20 year term with 4 X 5 options means 20 year commitment with 5 year renewals. A 5 year term with 3x5 options is still a theretical 20 year commitment but the tenant has an option to leave every 5 (again, depending on lease wording). Take a look at the lease, and if it is still unclear I always recommend having an attorney review it.

Jul 28, 2011
Report Abuse
Chris F.
Broker/Agent
Salem, OR

the 20 year term with 4 X 5 option means that after the original 20 year term the tenant has options to extend every 5 years. Wanted to clear that up

Jul 28, 2011
Report Abuse
Eric V.
Broker/Agent
Corona Del Mar, CA

As you can see, many answers here but one familiar answer is read your lease. The initial term is what you want to know.. is it 20 years? Or is it 5 years with 3 available optionals to renew for 5 years each to total 20 years? Most major credit tenants will sign long term 20 years lease with additional options to renew at x% increases. For instance, CVS will sign a 25year term with 10 options to renew at 5 years each option. There by equating to a total value of 75 years if CVS takes all options. Walgreens is similar however the wording on the lease states that it is a 75 year lease, but the Tenant has the option to terminate after the 25th year, and every subsequent 5 years. Thereby the lease is effectively a 25year lease with 10 options to renew.
Bottom line: read the lease and understand what the initial term will be, and how many options to renew and at what duration each option and at what rate or increase.
Hope this helps.

Jul 28, 2011
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question