My Realtor's tip about NNN leases made me reconsider two buildings

I was walking a 12,000 sq ft flex space in Phoenix last Thursday and my broker casually said, 'you're not buying the roof, you're buying the tenant's credit.' That one line hit different after I ran the numbers on a 20-year lease with a regional pharmacy chain versus a mom-and-pop gym. Has anyone else had a deal fall apart because the CAM reconciliations looked fine but the anchor tenant's financials were shaky?

1 comments

Log in to join the discussion

Log In

1 Comment

nathanwest1mo ago

Broker nailed it. Whole system works the same way everywhere. You get a nice looking report, the numbers line up, and nobody checks if the guy paying actually has money. Same thing happens with contractors who show you a pretty bid sheet but are three months behind on their supply house. The paper is fine, the payer is the problem. Pharmacy credit is boring but boring pays. Mom and pop gym might be a great neighbor, but when a lease hits year seven and they miss two months, you are the one eating it.

9