In net-lease investing, the lease is the asset. Here's how to read the terms that determine a childcare property's value.
Term and options
The remaining primary term and renewal options set the horizon of guaranteed income. Long initial terms — often 15 to 20 years — with built-in renewal options are prized because they push income certainty far into the future.
A short remaining term introduces re-leasing risk and typically widens the cap rate a buyer will accept.
Escalations and structure
Rent escalations — fixed annual bumps or periodic step-ups — protect the owner's income against inflation. Across net lease, a common structure is a 15-year term with roughly 10% increases every five years; a true triple-net (NNN) structure shifts taxes, insurance, and maintenance to the tenant, leaving the owner with clean, passive income.
These details directly drive your actual yield and the asset's appeal to passive investors.
The guaranty behind it
Who guarantees the lease — a corporate parent, a multi-unit franchisee, or a single operator — is the credit foundation of the deal. Stronger guaranties support tighter pricing.
We help buyers and sellers read these terms together to understand true value.
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