Evaluating an NNN Lease — the Document Diligence Checklist

The building gets inspected; the lease gets read — and in net lease, the reading is the larger share of the value. The document-diligence sequence we run on every buy-side file, separated from the property-side checklist (here).

Assemble the true document

The lease is the original plus every amendment, assignment, commencement memo, and side letter — and marketing packages reliably omit one. Demand the complete set against the estoppel’s amendment list; the missing document is always the one that moved rent, term, or responsibilities. Franchise deals add the guarantee instruments and any transfer-consent history.

The clause pass

In reading order of consequence: maintenance allocation (component by component — the pricing math); term, options, and any termination or kick-out rights (price to firm term); escalations (schedule, compounding, option-period treatment); assignment and guarantee mechanics (how weak can the counterparty become, and does the guarantee survive?); casualty/condemnation (rebuild obligations, termination triggers, proceeds control); use, exclusives, and co-tenancy (restrictions that follow the dirt); estoppel and SNDA obligations (delivery windows you’ll need); and rofr/rofo rights (exit friction worth pricing).

Reconcile against reality

Three documents must agree: lease, estoppel, and rent history. Mismatches are findings, not formalities — an estoppel noting a disputed CAM charge, rent deposits that skip a month, an exercised option nobody mentioned. Then reconcile against the offering: every flyer figure (rent, term, escalations, “NNN”) checked to a page and paragraph. The gap between marketing and document is where the price negotiation actually lives — and finding it is the cheapest money in the deal.