A single-tenant net leased property is a credit investment secured by real estate, and the diligence reflects that.
The lease. Term remaining, renewal options and whether they are at fixed rates below market, escalations, termination rights, casualty and condemnation provisions, and the allocation of capital expenditures. A lease permitting the tenant to terminate on casualty and retain proceeds changes the risk entirely.
Tenant credit. Financial statements, whether the lease is guaranteed and by whom, and whether the operating entity or a special purpose subsidiary is the tenant.
Estoppel certificate confirming the lease terms, the absence of defaults and offsets, prepaid rent, and any outstanding landlord obligations.
Assignment and change of control provisions, since the tenant’s credit may change without consent.
Property fundamentals. Residual value if the tenant leaves — location, building generic quality, and re-tenanting cost. A property with strong credit and no alternative use is a bond with a demolition liability.
Environmental for operating uses with historical risk.
Financing. Loan terms will match the lease term, and lender requirements — non-disturbance, insurance, reserves — should be confirmed before pricing.