When it comes to real estate investment trusts, most people think that the most important aspects are whether the tenants pay their rent and if that rent is enough to cover the debt service of a REIT. That’s true, but there is an even better type of REIT if you are looking for safety — “triple-net” lease REITs. These REITs will lease out property to tenants in which the tenant not only pays rent, but also all the real estate taxes, building insurance and maintenance. It’s where the landlord basically says, “pay me my rent and everything else is your problem.”
These triple-net lease REITs aren’t entirely free of risk. Most of the time, a triple-net lease is with a single tenant. So the REIT must be certain the tenant is creditworthy. That’s why you see big public companies as tenants of these REITs: Realty Income Corp (O), National Retail Properties, Inc. (NNN) and Store Capital Corp (STOR).
Source: InvestorPlace
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