NNN Lease Financing
NNN Lease and Single Tenant Net Lease Rates - Rates updated January 25th, 2022
|Loan Product||Starting Rates||LTV||Amortization/th>|
|5 Year Fixed Rates||3.59%||Up to 75%||Get Free Quote|
|7 Year Fixed Rates||3.74%||Up to 75%||Get Free Quote|
|10 Year Fixed Rates||3.84%||Up to 75%||Get Free Quote|
We specialize in making commercial mortgage loans for single tenant triple-net leased properties. These loans are sometimes called NNN lease financing, triple net lease financing, net leases, or single tenant lease financing. These loans are secured by properties occupied by one single tenant with an investment grade credit rating such as Walgreen’s or CVS, or non-credit tenants with acceptable financial statements. Our rates are extremely competitive, and we can offer fixed rates that match the lease term. Other examples of NNN leases that we have financed include: AutoZone, CVS Drug Stores, Dollar Tree, Family Dollar, Dollar General, Advance Auto Parts, O’Reilly Auto Parts, Starbucks, Tractor Supply, Walgreens and Sherwin Williams. We will also finance single tenant franchise locations such as Dunkin Donuts and McDonalds, as long as the franchisee provides acceptable financial statements.
Benefits of our NNN Lease Financing program:
Triple Net Lease Rates start as low as 3.59% (as of January 25th, 2022)
• A commercial mortgage broker with over 30 years of lending experience
• Single tenant loans up to 75% LTV
• No upfront application or processing fees
• Simplified application process
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
• Low stepdown prepayment penalties
• Non-recourse and partial-recourse options available
• Fixed rate loans up to existing lease term
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NNN Lease Loan Outlook for 2021 - Commercial Mortgage Rates
The COVID-19 pandemic seriously depressed the demand for apartment living space across the Unites States. One of the biggest factors that directly impacts apartment demand and household formation is a given market’s availability of jobs. The pandemic caused many people to be out of work and many other people to work remotely. Consequently, many prospective tenants such as new graduates lived with their parents or friends. With increased hiring in 2021 and many people returning to their in-office jobs, there has been a big rise in the demand for nationwide apartment housing. As more and more young graduates can return to work, this trend should continue throughout 2021. Commercial mortgage rates for apartment buildings have been at all-time lows throughout 2021 and experts don’t anticipate them to go up soon. The office and retail sectors did not fare so well in 2020 due to the pandemic. Many businesses shut down, brick and mortar retail shops had a hard time doing business and many companies implemented work from home policies. Many lenders were very conservative when considering commercial mortgage applications for these sectors. With vaccinations increasing and many states removing restrictions, business profitability has risen throughout 2021. In 2021, we are seeing companies hiring again after a dismal 2020. During 2021, it is estimated that more than 6.5 million workers will be added to company payrolls, many of them needing office space. Commercial mortgage lenders are not extremely bullish on the office sector and commercial mortgage rates, while attractive, are not as low as some other asset classes. Meanwhile, we are not seeing commercial mortgage lenders lend aggressively on retail properties in 2021. While the loans that lenders do fund may be at lower commercial mortgage rates, they aren’t as low as other asset classes and borrowers are having a difficult time obtaining high leverage loans in 2021.
Industrial properties are emerging well positioned from the pandemic and are expected to perform well in 2021 and beyond. The rapid growth of e-commerce, especially during the pandemic, is causing strong demand for industrial and warehouse space. 2021 has been a strong year for industrial absorption and sales prices of suitable industrial space has skyrocketed. Industrial properties currently are receiving very attractive commercial mortgage rates as this market is receiving a lot of attention. Experts believe that close to $578 billion of commercial mortgages and multifamily loans will be funded in 2021. This is over a 30% increase from 2020’s volume of $442 billion. As commercial mortgage rates remain at all-time lows, 2021 is a great time for prospective borrowers to look for commercial mortgage loans. Right now in 2021, commercial mortgage rates can be in the high 2% range for qualified properties and borrowers. Apartment loans above $6 million can qualify for rates in the mid- high 2% range while apartment loans below $6 million are generally being underwritten in 2021 in the low to mid 3% range. Many lenders are financing commercial mortgage loans for other asset types in the low to mid 3% range as well in 2021. Check out our low commercial real estate loan rates and use our commercial mortgage calculator to calculate monthly principal and interest.
Due to the coronavirus pandemic, many investors have stopped investing in regular commercial properties and have decided to purchase NNN lease deals during 2021 instead. NNN leases with national credit rated tenants, such as CVS and Walgreens drugstores are much safer than investing in properties that do not have credit rated national tenants. During the pandemic, many retail properties were either forced to close or went out of business due to Covid-19 lockdowns and restrictions. The national NNN lease locations outperformed the market and provided safety to investors. Certain tenants, such as Starbucks drive through locations, thrived during the pandemic. Investors have been flocking to these investment opportunities and NNN lease loans are expected to stay very strong in 2021.
2020 Outlook for NNN Lease Financing
In particular, Dollar General appears to be a fantastic triple net option for investors in 2020. In 2019 Dollar General Corporation opened 975 new locations and remodeled 1,000 locations. In fact, this rate of growth has been the trend for this company over the past half-decade. On the heels of its 31st consecutive quarter of same-store sales growth, Dollar General is set for incredible growth in 2020. With over 16,000 stores, Dollar General has a U.S. store count greater than that of McDonalds. In addition, roughly 75 percent of Americans live within five miles of a Dollar General store. By the end of 2020, Dollar General is set to open stores in Wyoming and Washington, bringing their store to 46 states, and is planning to add an estimated additional 1,000 locations throughout the country. Dollar General’s focus on low prices and consumer convenience has allowed it to thrive in this era of eCommerce. Dollar Generals offer a tremendous opportunity to own an investment grade tenant at purchase prices lower than the national average for single tenant net lease properties with an investor friendly triple net lease. Over the past five years, Dollar General properties have become the most actively traded triple net lease asset. 2020 is gearing up to be no different.
Additional Benefits of Single Tenant Net Lease Loans
There are many benefits to purchasing net leased properties and obtaining NNN financing. Triple net leased properties make it much more feasible for single tenant retail investors to purchase properties that can provide long term revenue streams. Here are a few reasons why you should consider a single tenant net leased property for your next purchase:
• Triple net leases typically provide an investor with a single tenant on a long-term lease. It is very normal for a these tenants to have a lease with over 10 years remaining on the term. These long-term leases provide the property owner a more stable source of rental payments. Short term leases in local retail centers can be disastrous for an investor. If the lease ends and the tenant does not renew, it could take a long time to fill the vacancy. Triple net tenants provide a certain level of certainty that rental payments will be made for a significant period of time.
• NNN leases significantly reduce the amount of time, energy and money that the property owner has to put into his or her building. With triple net leases, the tenant deals with property maintenance and pays taxes and insurance leaving the property owner with much more time and capital to invest in other properties.
• Additionally, net leases are very predictable and simple. Both parties are aware of the structure and the terms of a net lease upon signing the lease. This makes it simple to know what the rental income or payment will be throughout the entire term of the lease. All rent increases are on NNN properties are agreed to upfront by both parties, providing a stable income stream for investors.
• Properties with NNN leases are easier to finance than local shopping centers. Many lenders love lending on single tenant properties such as CVS, Walgreens, Dollar General, Family Dollar and Dollar Tree. Investors looking to invest in retail can get much better rates and terms on these deals than on other retail properties. While we aren’t very bullish on financing retail centers (with local tenants on short term leases), we are very actively offering net lease financing.
In our view, the best properties to purchase now are NNN properties with strong tenants. These tenants are corporately backed by big companies with financials available to the public. Lenders are aggressively offering net lease loans on single tenant occupied properties today. Some of the best net lease financing and triple net loans can be obtained on properties with top tenants such as CVS, Walgreens, Dollar Stores, Sherwin Williams, Fresenius Medical, etc. These tenants provide property owners some of the safest investments in commercial real estate and some of the best triple net mortgage terms.
Overall, we highly suggest that retail investors look into considering single tenant and triple net properties as part of their investment portfolio.