On 30 September 2026, Leslie's, the US pool supplies chain, filed for Chapter 11 bankruptcy protection in the Southern District of Texas and said it would close 76 stores, according to the company's announcement. For anyone who owns a building leased to a single tenant, it is the kind of headline that sends them back to the lease. Advisors whose clients are looking at private US property will find it a useful way into the triple net lease, a common arrangement for single-tenant commercial buildings in the US.
A triple net lease is one where the tenant pays the property tax, the building insurance and the maintenance on top of the rent, which leaves the owner collecting rent with few running costs. It is one of the three property types covered in the guide to US commercial real estate investment for advisors, and its structure sounds the simplest of the three. That simplicity holds in good years, and the test comes when a tenant gets into trouble, which is why this week's filing deserves a few minutes of an advisor's time.
What a triple net lease is and where the name comes from
The three nets are property tax, building insurance and maintenance, the three costs a landlord would otherwise pay out of rent. Under a single net lease the tenant takes on only the property tax, and under a double net lease it also pays the insurance, while the landlord keeps the repairs and structural work. Under a triple net lease, often written as an NNN lease, the tenant carries all three, so the rent the owner receives is close to what the owner keeps before loan payments and its own overheads. By contrast, a gross lease charges the tenant one all-in rent and leaves the landlord to pay the running costs out of it.
At the far end sits what the industry calls an absolute or bondable net lease, under which the tenant carries almost every property risk, including rebuilding after a fire. The name reflects rent that arrives on a fixed schedule from one counterparty, much like a bond coupon, but the comparison holds only as far as the tenant's ability to keep paying, and that is the point most worth explaining to a client.
Why property owners like the arrangement
The appeal is predictability. Because the tenant pays the running costs, the owner is shielded from a rise in property tax or insurance premiums during the lease. Single-tenant buildings are typically let on long leases, with the rent schedule written into the contract, which gives an owner a clear view of the expected income for years at a time.
That appeal comes with a trade. The owner's income depends on one tenant, so the quality of that tenant, the length of the remaining lease and the usefulness of the building to someone else matter far more than in a property with dozens of tenants. An apartment community or a self-storage facility spreads its income across many renters, which means a single departure barely moves the total. A single-tenant building, on the other hand, is either fully let or empty.
What happens to a triple net lease when the tenant goes bankrupt
Under section 365 of the US Bankruptcy Code, a company in Chapter 11 may, with the court's approval, keep or reject its unexpired leases. For leases of commercial property the law sets a deadline of 120 days for that decision, which a court can extend by a further 90 days, after which an undecided lease is treated as rejected, according to the text of section 365 published by Cornell Law School. A store the tenant wants to keep can carry on under its lease, while a store it wants to close can be handed back to the owner.
When a lease is rejected, the triple net structure goes into reverse. The tax, insurance and maintenance bills the tenant had been paying return to the owner from the day the building is surrendered, at exactly the moment the rent stops. The owner then has to find a new tenant, which may mean refitting the building and offering concessions, while the claim for unpaid rent joins the other creditors in the bankruptcy. Nothing in the Leslie's announcement says which of its stores sit in single-tenant buildings or who owns them, so this is an illustration of the mechanism rather than a comment on any particular landlord.
The broader lesson for clients is that a long lease is a promise, and its value depends on who makes it. A lease signed by a large, well-financed company is worth more than the same lease signed by a smaller operator, although well-known tenants have gone bankrupt before. The strength of the tenant, and what the building would be worth to the next one, therefore sits at the centre of any net lease decision.
Triple net lease risks to explain to a client
Advisors can set out the risks plainly. Capital can be lost if the property falls in value, and private real estate is illiquid, so a client should expect to stay invested for the full holding period with no easy way out. Tenants can leave or fail, distributions can be reduced or not paid at all, and borrowing against the property magnifies losses as well as gains. Concentration matters too, because a building that depends on one tenant carries more exposure to that tenant than a property with many.
Currency is the risk Indian clients should not overlook. The rent is paid in dollars, so the rupee value of any distribution, and of the capital when the property is sold, moves with the exchange rate, which can work against the client as well as for them.
How an Indian client would hold a net lease property
A resident Indian usually reaches private US property through the Liberalised Remittance Scheme, which allows remittances of up to USD 250,000 per person per financial year. Remittances for investment attract tax collected at source, known as TCS, under Section 394 of the Income-tax Act, 2025. For tax year 2026-27, the bank collects TCS of 20 per cent on investment remittances above ₹10 lakh, a threshold counted across all of a client's LRS remittances in the year, as the guide to TCS on foreign remittance explains.
For example, a client who remits ₹40 lakh for an investment, with no other LRS remittances in the tax year, would have TCS of 20 per cent collected on the ₹30 lakh above the threshold, which is ₹6 lakh. TCS is not an extra tax, because the client can claim it against their income tax liability in the return, but the money is tied up until then.
On the US side, offshore investors in private deals typically invest through a US corporation, known as a blocker, which holds the property interest on their behalf. The client owns shares in that structure rather than the building itself, and typically receives Form 1042-S, a US tax form that reports income paid to a foreign investor and any US tax withheld. The client's Indian tax position, including how that income and any foreign tax credit are reported, stays with the client and their CA.
Private property is not the only way to own net lease buildings. Some US-listed REITs specialise in them and can be bought and sold on an exchange, which offers liquidity but exposes the holding to stock market swings. Each route has its own strengths and limits, which the guide to GIFT City mutual funds and other global investment routes sets out side by side, and the recent pauses in some overseas fund subscriptions, covered in why international mutual funds keep closing, show that access to any route can change.
What advisors should do
The most useful habit is to read a net lease opportunity from the tenant outwards. Before a client commits, an advisor can ask who the tenant is and how sound its finances look, how many years remain on the lease, which costs the tenant actually pays under the lease wording, and what the building could be used for if the tenant left. It also helps to ask how much debt sits on the property, because borrowing narrows the room for error if the rent stops.
Advisors should then confirm the client's LRS headroom and TCS position for the tax year, and agree with the client's CA how the income will be reported in India before any money moves. Advisors who introduce eligible clients through Raveum's partner page will see net lease alongside self-storage, multifamily and other income-producing commercial property, because Raveum offers diversified US commercial real estate, with each deal reviewed by Raveum and held in its own legal entity. Raveum handles KYC, agreements and US tax forms, while the judgement about whether an investment suits a client stays with the advisor.
The Leslie's case will now work its way through a Texas bankruptcy court, and the company has said it expects to emerge from Chapter 11 in early 2027. For advisors, its value lies in the reminder that a triple net lease moves costs to the tenant only for as long as the tenant is there to pay them. Clients who understand that will ask sharper questions about the tenant behind the lease, and the guide to US commercial real estate investment for advisors is a sensible place to begin that conversation.
Frequently asked questions
What is a triple net lease in simple terms?
A triple net lease is a commercial lease under which the tenant pays the property tax, building insurance and maintenance in addition to rent. The owner collects rent with few running costs, but takes those costs back if the tenant leaves, which is why the tenant's financial strength matters so much to the owner.
What is the difference between a triple net lease and a gross lease?
Under a triple net lease the tenant pays rent plus the property's tax, insurance and maintenance bills. Under a gross lease the tenant pays one all-in rent and the landlord pays those costs out of it. Gross leases therefore tend to carry higher rent, while triple net rent is lower but more predictable for the owner.
What happens to a triple net lease if the tenant files for bankruptcy?
Under section 365 of the US Bankruptcy Code, a tenant in Chapter 11 can keep or reject its leases with court approval. For commercial property it has 120 days to decide, which a court can extend by 90 days. If the lease is rejected, the owner loses the rent and takes back the tax, insurance and maintenance costs.
Is a triple net lease property suitable for every Indian client?
No. Net lease property is illiquid, depends heavily on one tenant and can fall in value, and distributions can be reduced or stop. Its value in rupees also moves with the exchange rate. It may suit clients who can hold for the full period, do not need the money on a fixed date and accept these risks after advice.
How does a resident Indian invest in US net lease property?
Most resident clients remit money under the Liberalised Remittance Scheme, up to USD 250,000 per person per financial year. For tax year 2026-27, TCS of 20 per cent applies to investment remittances above ₹10 lakh. In private deals, offshore investors typically hold shares in a US blocker corporation and receive Form 1042-S each year.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
