Introduction: Real Estate Income Without Operational Burden
Commercial real estate has long been a reliable generator of income and diversification. But not all real estate is created equal—and the reality is that many investment opportunities come with management demands, short lease terms, or tenant risk that erodes returns over time.
At Sentinel Net Lease, we focus on identifying stabilized, cash-flowing commercial properties—typically structured as net leases—where tenants assume operating costs and lease terms support long-term income. But we don’t rely on structure alone.
This guide breaks down what a net lease is, how the structure works, and why strategic sourcing and management matter more than the lease label itself.
What Is a Net Lease Structure?
A net lease is a contractual agreement where the tenant agrees to pay base rent plus some or all operating expenses, such as:
- Property taxes
- Insurance premiums
- Maintenance or repair costs
This shifts a portion of the cost burden off the landlord, creating a more predictable income stream.
Types of Net Leases:
- Single Net Lease (N): Rent + property taxes
- Double Net Lease (NN): Rent + property taxes + insurance
- Triple Net Lease (NNN): Rent + taxes + insurance + maintenance
Clarification: While triple net leases reduce property-level involvement, that doesn’t make them “hands-off.” Oversight, lease strategy, tenant health, and market performance still require active management.
How Sentinel Uses Net Lease Structures Strategically
Net lease is not our strategy—it’s how we structure tenant agreements. Our strategy is to source institutional-quality commercial real estate that is:
- Stabilized and income-producing at time of purchase
- Leased to creditworthy tenants with essential business models
- Acquired below replacement cost
- Located in demographically strong or emerging markets
Our properties include:
- Training and administrative facilities for major employers
- Back-office operations for healthcare-related tenants (not MOBs)
- Service-based retail such as grocery, fitness, and necessity-driven locations—not QSR or convenience store chains
These aren’t typical STNL deals—they’re carefully selected, “needle-in-the-haystack” opportunities with long-term upside and low operational risk.
Benefits of Net Lease Structures (When Paired with Strategy)
Income Stability
- Long-term leases (often 10–25 years) support predictable cash flow
- Many include rent escalations to account for inflation
Tenant-Paid Expenses
- Most operating costs are handled by the tenant
- Exposure to rising taxes, insurance, or maintenance is limited
Lower Management Burden
- Sentinel handles acquisition, lease oversight, and asset performance
- Investors receive reporting, income distributions, and strategic updates
Portfolio Diversification
- Properties span service sectors and markets
- Portfolios are constructed to balance tenant types and lease maturities
Tax Efficiency
- Eligible for depreciation and cost segregation
- May qualify for 1031 exchanges upon disposition
Investors should consult their tax professional for personalized advice.
Net Lease vs. Traditional CRE
|
Feature
|
Traditional Real Estate
|
Sentinel Net Lease Approach
|
|---|---|---|
|
Lease Term Length
|
1–5 years
|
10–25 years
|
|
Tenant Responsibility
|
Landlord pays most expenses
|
Tenant pays OpEx under net lease
|
|
Landlord Involvement
|
High
|
Low, professionally managed
|
|
Expense Volatility
|
High
|
Limited via lease structure
|
|
Tenant Type
|
Local/mid-market
|
Credit tenants in essential sectors
|
Who Is This Right For?
This structure and strategy is designed for:
- Investors seeking stable, passive income
- Individuals rolling over from active real estate
- High-net-worth families focused on income preservation
- Fiduciaries and advisors looking to diversify without increasing risk exposure
Conclusion: Structure Matters—But Strategy Drives Performance
Understanding net lease real estate starts with the lease structure—but success comes from what’s behind it.
At Sentinel Net Lease, we go beyond deal packaging. We source off-market, stabilized, income-generating properties where lease terms, tenant quality, and risk alignment work together to create long-term value.
Net lease is the structure. Strategy is the differentiator.
