# Single-tenant and net-lease retail Canonical: https://commercialdebtadvisory.com/property-types/single-tenant-net-lease/ Status: Published Publisher: Jaken Finance Group Version: 8d1179cae0e07b644094234fe7a7c4f61009cad29572cc6a0107bc5becc1099e Underwrite the legal obligor, surviving obligations and replacement cash through maturity. ## The financing decision Does lease durability extend through debt maturity and fund a replacement tenant if needed? Start with the lease and guaranty, not the sign on the building. Make a dated map of rent, tenant options, landlord obligations and loan maturity. Then build a second case for the time after the current tenant stops paying. This evidence map complements the existing balloon-exposure guide and does not treat a net-lease label as a credit rating. ## What changes the analysis ### Show landlord costs explicitly Realty Income’s 2025 Form 10-K describes its net-lease business alongside property management and re-leasing work. For the proposed property, read roof, structure, capital and restoration provisions directly. Mark disputed responsibility as an unresolved exposure instead of assigning zero cost. Sources: realty-10k ### Keep renewal and replacement distinct Realty Income’s Q2 2025 supplemental separately reports leases to existing and new clients, vacancy months and lease incentives. Use that disclosure structure, not its portfolio results, to distinguish your renewal case from a replacement-tenant case. Sources: realty-supplement ### Align the remaining lease with the balloon Create one calendar for lender maturity, tenant notice dates, early termination, renewal rights and guaranty expiry. Test the loan using the actual contractual rights and a supported alternative use. An unexercised option is a possible outcome, not committed rent. ## Questions to prepare for a lender ### Who owes rent and who guarantees it? Obtain executed lease and guaranty documents, entity identification and available financial evidence; separate a franchisee from its brand owner. ### What survives vacancy or lease termination? Ask counsel to identify repair, tax, insurance, restoration and environmental allocations, then cost the borrower’s supported obligations. ### What funds the replacement period? Prepare downtime, carrying costs, tenant improvements, commissions and available equity using property-specific evidence. ## Preparation checklist These are preparation suggestions; the lender determines the transaction-specific requirements. - [ ] Complete lease and guaranty file: Establish the actual obligor, amendments, options and release provisions. - [ ] Critical-date and debt-maturity calendar: Expose the sequence of notice, expiration, renewal and refinance decisions. - [ ] Landlord responsibility and condition schedule: Tie physical work to the party that actually bears it. - [ ] Tenant credit evidence and limitations log: Identify which financial statements are available and which tenant assumptions remain unsupported. - [ ] Replacement-use budget and leasing evidence: Support the cash required after the current lease rather than assuming a costless renewal. ## Hypothetical decision ### Hypothetical: tenant option after loan maturity A loan matures before the tenant must exercise its next renewal option. Compare a refinance based on only the committed lease term with a separate verified-renewal case. Include property carrying and replacement cash if the tenant declines. Ask prospective lenders how they treat the remaining term. The borrower should resolve the timing gap in the financing discussion rather than treating a tenant-controlled option as certain income. ## Using the existing model The existing Retail underwriting model can analyze supported rent, expenses and debt. It does not evaluate corporate credit, determine credit-tenant-loan eligibility or interpret a guaranty. Additional schedule: Add a legal-obligor and critical-date schedule plus a separately costed replacement case. Existing package: https://commercialdebtadvisory.com/models/retail/ ## Sources and applicability - realty-10k: [Realty Income — 2025 Form 10-K](https://www.sec.gov/Archives/edgar/data/726728/000072672826000011/o-20251231.htm) — Business / Asset Management; MD&A / Leasing and re-leasing costs. Checked 2026-10-21. Issuer-specific business and expense disclosure, not a definition of all net leases. - realty-supplement: [Realty Income — Q2 2025 Supplemental](https://www.sec.gov/Archives/edgar/data/726728/000072672825000129/realtyincomeq22025supple.htm) — Leasing Activity, same-client versus new-client re-leasing. Checked 2026-10-21. Used for analytical schedule structure; reported portfolio figures are not adopted as assumptions. AI-assisted preparation; publisher review status is recorded separately. ## Dedicated niche underwriting package Status: published Package version: 008c941559680ec50b9d4a90f609881d4e61ee6244b87b31aba97e48ea908d08 - [Download dedicated Excel model](https://commercialdebtadvisory.com/downloads/niche-packages/single-tenant-net-lease-underwriting-model.xlsx) - [Download lender guide PDF](https://commercialdebtadvisory.com/downloads/niche-packages/single-tenant-net-lease-lender-guide.pdf) The existing model discussion above concerns the core asset workbook. Use this dedicated package's instructions and limitations for its niche calculations. - All numerical values are illustrative; no market facts or lender approval are asserted. - The twelve-month operating model omits taxes on investor returns and future refinancing costs except expressly entered items. - Author verification uses Artifact Tool recalculation, saved-XLSX reimport and separate JS arithmetic; independent application verification is recorded separately. - Legal, licensing, environmental, engineering and lender-specific recognition require actual diligence.