A recognized authority on net lease real estate financing and transaction, Norton Herrick serves as the chairman and chief executive officer of the Herrick Company, an investment firm responsible for transacting more than $5 billion in purchases and sales since its establishment in 1960.
In the commercial real estate industry, net leases are often transacted between lessees and tenants. Such an agreement directs that the tenant holds responsibility for costs – such as utilities and maintenance, among other operating expenses – that may otherwise be assigned to the landlord. As this burden of cost is transferred to the tenant, a landlord may charge less rent. The leases may be negotiated to include a cost cap, referring to a maximum annual amount by which a landlord is permitted to raise fees.
The most common types of net leases are referred to as single, double, and triple net leases. With a single net lease, property taxes are added to the rental amount. Double net leases add building insurance to the fees covered by the tenant, and a triple net lease contains the most comprehensive list of additional fees: taxes, insurance, and maintenance, as well as utilities.