Absolute Net Lease

AN

Absolute net leases transfer all expenses to the tenant — zero landlord obligations. Learn bondable net leases, investment-grade tenants, and risks.

By Angel Campa, Founder · Updated March 2026

Overview

An Absolute Net Lease (also called a bondable net lease) places 100% of property-related expenses and risks on the tenant, including structural repairs, roof replacement, and foundation work. The landlord has zero ongoing obligations — they receive rent as a passive income stream equivalent to a bond. Absolute net leases are typically reserved for investment-grade single tenants on long-term deals, often 20+ years.

Expense Breakdown

Tenant Pays

  • •Base rent
  • •Property taxes
  • •Building insurance (all types)
  • •Roof repair and replacement
  • •Structural and foundation repairs
  • •HVAC systems — maintenance, repair, and replacement
  • •All common area maintenance
  • •Utilities
  • •Parking lot maintenance
  • •Landscaping
  • •Environmental remediation
  • •All capital expenditures

Landlord Pays

  • •None — landlord has zero ongoing property obligations

Typical Profile

Typical Industries

Investment-Grade RetailPharmacy (Walgreens, CVS)Fast Food (Corporate)Dollar StoresBanks (Corporate Branches)

Typical Term Length

20–25 years

Pros & Cons

For Tenant

Pros

  • +Maximum control over building condition and vendor selection
  • +Lower base rent than gross or modified gross structures
  • +Predictable landlord relationship — no expense disputes
  • +Full operational autonomy with no landlord interference

Cons

  • −Bears all property risk — one catastrophic event can mean millions in repair costs
  • −Responsible for roof replacement — often $200,000 to $1,000,000+ per event
  • −Structural repairs are unpredictable and can be financially devastating
  • −Very long terms (20-25 years) reduce flexibility significantly

For Landlord

Pros

  • +Pure passive income — zero property management obligations
  • +Lease is functionally equivalent to a long-term bond investment
  • +Highly financeable — lenders love absolute net leases with investment-grade tenants
  • +Property can be sold at low cap rates to net lease investors

Cons

  • −Zero control over property condition — landlord cannot force maintenance
  • −If tenant defaults, property may be in poor condition
  • −Lower yields than actively managed properties due to passive nature
  • −Tenant credit quality is everything — there is no fallback income if tenant fails

Critical Fields to Abstract

These are the highest-priority fields Lextract extracts from AN leases. Click any field to learn what it means and why it matters.

Base RentRent Commencement DateLease Expiration DateRenewal OptionsAssignment RightsInsurance RequirementsProperty TaxesPermitted UseTermination OptionsSubletting Rights

Common Red Flags

Lextract automatically detects these red flags in AN leases. Click any flag to learn the impact and what to do.

No Renewal OptionNo Termination OptionMissing Restoration ClarityRecapture Right PresentMissing Audit Rights

Compare With

Nnn Lease

View expense breakdown and red flags →

Double Net Lease

View expense breakdown and red flags →

Net Lease

View expense breakdown and red flags →

Ground Lease

View expense breakdown and red flags →

Frequently Asked Questions

Why is an absolute net lease called a "bondable" lease?

An absolute net lease is called bondable because the landlord's income stream is as predictable and passive as a bond coupon. The investment-grade tenant pays rent unconditionally regardless of property condition, and the landlord has no operating obligations. Investors treat these leases as bond-equivalent assets and price them at very low cap rates similar to bond yields.

Who uses absolute net leases?

Absolute net leases are typically executed by investment-grade corporate tenants — major pharmacy chains like Walgreens and CVS, fast-food corporations like McDonald's and Starbucks, dollar store chains, and major banks. These tenants have the financial strength to absorb all property risk and the operational scale to manage properties efficiently.

What is the difference between an absolute net lease and a NNN lease?

A standard NNN lease may still hold the landlord responsible for structural elements like foundation and sometimes roof in practice depending on how the lease is drafted. An absolute net lease explicitly transfers all expenses and risks including structural to the tenant with no exceptions. The absolute net lease is the extreme end of the net lease spectrum.

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