Absolute NNN vs NN Leases: What Real Estate Investors Need to Know

In the world of commercial real estate investing—especially when dealing with net leased retail properties—understanding the differences between Absolute NNN (Triple Net) and NN (Double Net) leases is essential for evaluating risk, responsibility, and return. These terms are often used loosely, but their distinctions have real financial implications.

When investing in single-tenant net lease properties (STNL) like quick-service restaurants, gas stations, pharmacies, dollar stores, or medical clinics, you’ll often see listings labeled as “Absolute NNN” or “NN.” But what do these labels really mean? The answer lies in the lease—and only the lease.

This article explains the critical differences between Absolute Triple Net vs Double Net leases, how lease structures impact property ownership, and what investors should look for when buying a net leased asset.

What Is an Absolute NNN Lease?

An Absolute NNN lease, also known as a bondable NNN lease, is the most passive form of real estate ownership available. Under this structure, the tenant assumes all responsibility for the property, including:

Property taxes
Insurance
All maintenance and repairs, including:
- Roof and structure
- Parking lot repair and replacement
- HVAC and mechanical systems
- Pest control and landscaping
- Even casualty and condemnation risk

In essence, the landlord simply collects a rent check each month—typically with zero operating expenses or capital obligations.

These leases are often associated with investment-grade tenants (like Walgreens, Dollar General, or 7-Eleven) and are desirable for hands-off investors looking for long-term, predictable income.

Key Features of Absolute NNN Leases

True passivity: No landlord responsibilities
Stable cash flow: Lease terms are typically long (10–25 years) with scheduled rent increases
No capital expenditures: Tenant pays for roof, structure, and any major system failures
Attractive to 1031 exchange investors and retirees seeking mailbox money
Bond-like structure: The lease is designed to mimic the security of a fixed-income investment

Absolute NNN leases are common with corporate-backed leases and newer construction properties. But true absolute leases are relatively rare—and some so-called “NNN” listings may contain carve-outs or hidden landlord responsibilities.

What Is a NN Lease?

A NN lease, or Double Net lease, differs in one key way: the landlord retains responsibility for certain expenses or obligations, usually related to capital repairs or structural elements of the property.

However, what makes NN leases particularly complex is this: there is no industry-standard definition of which responsibilities are retained. A NN lease can vary greatly depending on the specific language in the lease agreement.

Examples of landlord obligations in a NN lease might include:

Roof repairs only
Roof and structure
Structure only
Parking lot replacement but not maintenance
HVAC replacement but not ongoing service
Exterior façade repairs
Underground utility lines

In other words, a NN lease is not defined by a specific set of exclusions—it’s simply any lease where the landlord is not 100% free from responsibility. The details depend entirely on the lease terms.

The Spectrum of Net Leases: It’s All About the Lease

The most important thing for buyers and brokers to remember is this:
Net lease terminology is informal. The lease tells the truth.

Whether a lease is labeled as NN, NNN, or Absolute NNN, you must review the actual lease document to determine which expenses and repairs the landlord is responsible for.

Here’s a spectrum to help visualize the difference:

Lease Type	Landlord Responsibilities	Tenant Responsibilities
Gross Lease	All expenses (taxes, insurance, repairs)	Rent only
Modified Gross	Some shared expenses	Rent + some expenses
NN Lease	Structural or capital repairs (varies)	Taxes, insurance, most maintenance
NNN Lease	Very limited capital obligations	Nearly all operating and maintenance costs
Absolute NNN	None (zero responsibility)	Everything including roof, structure, etc.

Remember: a “NNN” listing may not be truly absolute, and a “NN” lease might be nearly triple net. Only by reading the lease can you identify what type it really is.

Examples of NN Lease Variations

To illustrate how diverse NN lease structures can be, here are real-world examples of NN landlord responsibilities:

1. Roof Repairs Only

The tenant is responsible for all maintenance, but the landlord must repair or replace the roof if it leaks.

2. Roof and Structure

The lease explicitly carves out responsibility for roof membrane, framing, and load-bearing walls to the landlord.

3. Parking Lot Replacement

Tenant covers sweeping, restriping, and snow removal, but the landlord must resurface the lot every 15 years.

4. HVAC Replacement

Tenant maintains the HVAC under a service contract, but the landlord pays if a full replacement is required.

5. Signage and Pylon Maintenance

The lease requires the landlord to maintain shared pylon signage and monument signs for a multi-tenant property.

Each of these would qualify as NN leases, though the landlord burden varies widely. Again, the lease determines everything—not the listing label.

Why This Distinction Matters to Investors

1. Risk Assessment

Absolute NNN properties offer predictable, fixed returns with minimal downside risk from capital repairs. NN leases, by contrast, expose the owner to uncertain future expenses. A roof replacement or structural issue could eat into profits—or worse, create a cash flow loss.

2. Property Valuation and Cap Rates

Because of the added risk, NN leased properties typically trade at higher cap rates than Absolute NNN properties. Investors demand additional return for the responsibilities they’re taking on.

For example:

A Walgreens with an Absolute NNN lease may sell at a 5.00% cap
A similar Walgreens with a NN lease (landlord pays for roof) may sell at a 5.50% cap

That difference in cap rate compensates the investor for assuming greater risk—and possibly future capital expenses.

3. Financing Considerations

Lenders also care about lease structure. A property with no landlord responsibilities may qualify for better loan terms or higher leverage. Properties with capital obligations can sometimes reduce loan-to-value or increase lender reserves.

4. Exit Strategy

When it’s time to sell, Absolute NNN properties appeal to a broader buyer pool—including 1031 exchange buyers, family trusts, and institutions—because of the low maintenance profile. NN leased assets may attract value investors or experienced operators, but the pool may be smaller.

How to Evaluate a NN Lease Investment

If you’re considering a NN property, here’s a checklist to assess the risk:

Review the lease in full—not just the summary
Identify landlord obligations—especially roof, structure, parking lot
Request a roof report or inspection if roof is landlord’s responsibility
Understand replacement cycles for HVAC, pavement, etc.
Consider setting reserves for anticipated capital items
Weigh cap rate vs responsibility—higher return should justify the risk
Know your tenant’s financials—a strong tenant may make risk worthwhile

Many NN properties can still be excellent investments, especially when priced appropriately. You just need to enter the deal with your eyes open.

Conclusion: It’s All in the Lease

At the end of the day, the difference between an Absolute NNN lease and a NN lease is not the label—it’s the language. While brokers and listings may use shorthand terms, only the actual lease document tells you who’s responsible for what.

If you’re buying a property advertised as “NN,” don’t assume what that means—dive into the lease and identify exactly what you’re liable for. From roof replacement to parking lot resurfacing, every line of the lease matters.

Absolute NNN leases offer pure passivity and simplicity. NN leases, if priced and managed correctly, can still offer excellent risk-adjusted returns. The key is understanding what you’re buying and pricing the property accordingly.

Whether you’re a seasoned real estate investor or just getting started in the net lease space, always remember this rule: NN means “read the lease.”