Triple Net Lease Reserves

[Jennifer Allen]

How much cash reserves should you keep for a triple net lease? Do you try to cover your monthly expenses for X months for when you have to find a new tenant? Do you base it on the building cost or size? I'm trying to figure out how much money I should keep on hand so I don't have cash flow problems if a tenant moves out.

Thanks.

[Jameson Sullivan]

I would say it's asset specific. "Triple Net Lease" doesn't give us enough information, it's simply the contract structure. Is this an A class single Tenant building or a C-class strip center? The quality of your tenants and location of you building will dictate what kind of reserves you need moreso than will the lease structure. Your building could sit vacant for 3 to 6 months or longer if one of your tenants leaves. Additionally there is likely going to be substantial costs in re-tenanting the building including commissions and TIA which need to be accounted for.