Companion to: Real Estate Decoded Chapter 9 (Triple-Net NNN) - Workbook tab 16_Triple_Net_NNN
Inputs
Outputs
Annual base rent
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Asking cap rate
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Market cap (credit + WALT adjusted)
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Implied fair value
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Pricing vs. market
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How to read this tool: Cap rate alone doesn't tell the story. A 6.5% cap on a BBB- tenant with 4 years remaining is materially different from a 6.5% cap on a AAA tenant with 18 years remaining. This tool adjusts the market cap rate for credit AND lease-term. Use the spread to evaluate the asking price.
What this tool is for
Investment-sales NNN brokerage runs on cap-rate compression and expansion across credit tiers and lease-term tiers. The institutional NNN buyer (Realty Income, STORE Capital, Spirit Realty class) has internal cap-rate matrices by credit and WALT. This tool gives the practitioner a working approximation of that discipline.
Benchmarks the practitioner watches
- AAA / Walmart-class: 5.2-5.5% on 15+ yr WALT
- Investment-grade (BBB-/BBB/BBB+): 6.0-7.0% on 10-15 yr WALT
- Sub-IG (BB-rated regional): 7.5-9.0%
- Unrated / personal-guaranty franchisee: 9.0-11.0%
Common mistakes
- Treating all NNN cap rates as comparable without credit-and-WALT adjustment
- Ignoring the difference between absolute-net (true NNN) and double-net (landlord roof + structure)
- Underwriting the franchisor credit when the actual lessee is a franchisee operating company
- Missing the rent-bump escalator and percentage-rent kicker that materially affect IRR
Educational reference only. Not investment, tax, legal, or real-estate advice. Confirm market-specific cap rates, lender terms, and tax overlay with your own advisors before acting.