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The Art of Crafting a Strong Net Lease

CHICAGO-Net-lease investors would be well served to focus on more than a deal's economic factors when drafting a new net lease, says Stan Johnson's Brad Feller.

By Brad Feller, associate director of Stan Johnson Co. | Updated on January 15, 2013

CHICAGO-Net-lease investors would be well served to focus on more than a deal’s economic factors when drafting a new net lease. Experienced outside counsel and expertise at this key moment can ensure long-term protection of an asset’s value.

The art of creating a fundamentally sound net lease, after a tentative agreement is reached between a landlord and tenant, is a frequently overlooked skill among the real estate investment community. Too often, new leases include potential pitfalls, which while seemingly insignificant when the lease is executed, could have disastrous long-term consequences for landlords. The impact of lease deficiencies can range from severely compromising the sale value of a property, to making refinancing impossible, or allowing a tenant to reduce his rent arbitrarily or even terminate a lease early.

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