NNN or TIC Investment?
Investors interested in 1031 Exchanges are often presented with numerous options, including Tenant-in-
Common Investments (TICs) and Net Lease Investments (also called NNN Leases). NNN Leases and TICs both
offer viable alternatives for exchange investors interested in reducing overall property management responsibility
and increasing the quality of the tenants and/or property. Highlighted below are some of the differences
between these two types of investments.
| NNN Lease Investments |
TIC Investments |
Investment Characteristics:
- Usually sold as real estate – “buyer beware”
- Appreciation opportunity likely small
- Larger minimum investment required
- Usually retail asset class
- Valuation often more related to business operations than real estate value
- Investor is asset manager
|
Investment Characteristics:
- Sold as security – significant disclosure required
- Potential for more upside upon sale
- Smaller minimums due to syndication
- Wider variety of asset classes available
- Valuation a combination of real estate value and business operations
- Professional asset manager engaged
|
Tenants:
- Typically single-tenant space
- Usually national credit tenant
- High credit tenants typically have lower rent increases
- Little diversification
- Many single-tenant properties are specific-use and would be difficult to re-tenant if necessary
|
Tenants:
- Can be single-tenant or multi-tenant space
- Diversity of tenant businesses
- Diversity of tenant base allows for potential for higher rent increases
- Diversification through multiple tenants
- Properties can range from specific-use to very general, creating better opportunity for re-tenanting
|
