Triple Net Lease (NNN)

A triple net lease (NNN) is a lease structure in which the tenant pays not only base rent but also property taxes, building insurance, and maintenance costs, shifting nearly all facility operating expenses from landlord to tenant. In data center real estate, NNN structures are common for build-to-suit and single-tenant hyperscale deals, where the operator-landlord constructs the powered shell and electrical infrastructure while the hyperscale tenant covers ongoing operating costs on top of rent. This differs from a gross lease, where the landlord absorbs operating costs within a single rent figure. NNN terms typically run 10-20 years on hyperscale data center leases, giving REIT landlords predictable, low-volatility cash flow that underpins the valuations used to calculate cap rates and yield-on-cost.