Triple Net Lease Investments in Alberta

1. Define what the offering means by triple net

Ask the seller or listing representative to identify the lease clauses supporting the label. Record the treatment of taxes, building insurance, utilities, maintenance, repairs, management, common areas and capital items instead of relying on NNN as a universal definition.

Separate direct tenant payments from landlord-paid costs that are later recovered. Timing, exclusions, caps, gross-up, administration and non-recoverable items can change cash flow even when an expense is described as recoverable.

• Taxes
• Insurance
• Utilities
• Repairs
• Capital
• Management
• Administration

2. Reconstruct the complete lease record

Obtain the executed lease, amendments, renewals, assignments, guarantees, side letters, notices and material correspondence. Build a clause-cited abstract showing the current parties, premises, term, rent, recoveries, options and obligations.

A marketing summary, rent roll or unsigned proposal is not the contract. Counsel should determine document priority, interpretation, enforceability and the rights that transfer on sale.

3. Reconcile recoveries to actual property costs

Compare lease provisions with tax notices, insurance invoices, utilities, maintenance contracts, repair ledgers, operating statements, budgets and annual reconciliations. Trace billed, collected, outstanding, disputed and credited amounts by period.

Normalize timing differences without hiding arrears, caps, exclusions, vacancy shortfalls or disputed charges. Current NOI should show the costs the owner actually bears after contractual and practical recoveries.

4. Identify retained landlord obligations

Map responsibility for roof, structure, envelope, foundations, parking, paving, drainage, mechanical, electrical, fire systems, casualty, condemnation and replacement. Compare the lease allocation with the building-condition evidence and maintenance practice.

A tenant may pay routine maintenance while the landlord retains major repair or replacement. The underwriting should carry those obligations even when no immediate expenditure appears in the trailing statement.

5. Verify tenant identity and covenant

Match the tenant and guarantor names to the executed documents and current corporate evidence. Review appropriately authorized financial, credit, business, payment and insolvency information with current dates and professional advice.

Alberta Corporate Registry and federal insolvency records are evidence sources, but neither proves future performance. A recognized trade name, franchise or location does not establish which legal entity is liable or whether a parent supports the lease.

6. Measure contractual term without assuming renewal

Record commencement, rent commencement, expiry, termination and notice dates. Model the current enforceable term separately from renewal options, extension scenarios, holdover assumptions and future market leasing.

Do not add an unexercised option to remaining term, WALT or value as though it were committed. Review option conditions, rent-setting mechanics, notice windows and tenant rights with counsel.

7. Test sale, financing and continuity provisions

Review landlord transfer, notice, assignment, subordination, attornment, non-disturbance, mortgagee, insurance and casualty provisions with counsel and the lender. Confirm whether deposits, prepaid rent, letters of credit, guarantees and operating contracts can be transferred as intended.

Coordinate appraisal, environmental, building, insurance and lender reliance requirements early. A long lease does not remove asset, title, environmental, financing or closing risk.

8. Run vacancy and expense sensitivity

Model tenant default, non-renewal, downtime, market rent, free rent, tenant improvements, commissions, legal work, repairs, carrying costs and sale timing. Include the owner's complete costs during a vacant period when recoveries stop.

RECA's commercial competency framework connects tenant covenant, adjusted and stabilized NOI, cap rates, leverage and sensitivity analysis. Use qualified appraisal, accounting, legal, lending and technical professionals where the decision requires conclusions within their scope.

9. Protect confidential tenant information

Stage detailed financial and personal information after buyer qualification and a defined transaction need. Use controlled access, redaction, logging and retention rules, and distinguish corporate tenancy evidence from personal information.

Alberta PIPA sets rules for private-sector organizations. Counsel and privacy leads should determine the authority and safeguards for transaction-specific disclosure; an NDA alone does not create unlimited disclosure authority.

10. Convert findings into an acquisition decision

Maintain an exception register showing each finding, source, cash-flow effect, responsible reviewer, response and transaction treatment. Update price, financing, conditions, reserves, closing deliverables and exit assumptions from the verified record.

This guide is educational and is not legal, accounting, tax, appraisal, lending, privacy, engineering, environmental or investment advice. The property-specific lease and professional conclusions control.