Triple Net Lease - Single Investment Grade/Tenants/Properties

[Ted Brandt]

Hi Folks,

I'm just recently getting educated on commercial real estate & am really interested in absolute triple net lease, single investment grade or franchisee tenant/properties, however I'm concerned about the worst case scenario of having the single investment grade or franchisee tenant not wanting to release after the initial 15/20 year term is up (& do not want to initiate 5 yr term options). I know to keep risk as low as possible of this property going vacant after the initial lease term (or franchisee BK) would be to make sure I have invested in a property with a good location, growth market, population growth, good visability & all that stuff but my real question is what are the property types that have the lowest risk of having issues with vacancies or if it does go vacant it's not vacant for long after the initial term is up? Is it QSR's (quick service restaurants)? Seems if this type of property is in a good location there would be plenty of other franchisee's of the same brand or a different brands standing in line to take that location because there are so many different types a fast food chains/operators that could use the same or close to the same layout. Would that be close to accurate? Also typically would I be able to initiate another absolute triple net lease for another 15/20 years with a new franchisee tenant? Would this new tenant typically pay for any updates/upgrades/repurposing that is needed to the property or would that be on me as the landlord? I ask this question as I really like the passive income/NOI that comes with this kind of investment for the 1st 15/20 yrs but just concerned about post that. Does it get messy after that and become a less passive investment with shorter lease terms, more landlord responsibilities...etc?