Are you referencing a NNN property being offered for sale? A lot of NNN leased properties are now being offered as ground leases when marketed/sold to absentee investors. Previously many triple net leased (NNN) properties included the building and/or other improvements as part of the sale, however there seems to be a movement towards NNN ground leases which are probably more straightforward from a developer/tenant perspective and allows the developer or tenant, etc. The ground lease also allows a developer to retain their interest and rights to the tax depreciation of the improvements. Also, if the building as part of the lease, this sometimes means that the NNN tenant, such as bank or pharmacy will end up providing a structure which might at the end of the lease provide a competitor with an existing facility to compete from. Under the building included scenario, there are potential issues related to the building maintenance. As part of the ground lease, it is important to review who is responsible for site cleanup in the event of contamination, etc especially if the lease involves fuel, etc. Subordination of land to building/mortgage interests could be an additional concern. There are many additional issues that can develop depending upon the property use and lease agreement. As previously noted, please consult an experienced Commercial Realtor(r) AND an experienced attorney.
Jun 2, 2010