Real Estate

Triple Net Lease (NNN)

Blue Owl is a leader in net-lease real estate investing, which are contractual lease agreements where a tenant is obligated to pay expenses associated with the property.

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Understanding NNN Our approach Our solutions Insights & resources Important information
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A potential growth opportunity

The potential U.S. and Canadian sale-leaseback investment universe is nearly $12 trillion, while annual transaction volume is approximately $87 billion, representing <1% of the overall market size.1,2

We believe the increased tenant interest in sale-leasebacks and build-to-suit opportunities is driven by three key market factors: capital efficiency, the potential for enhanced returns, and favorable accounting (e.g., tenants who pay taxes can fully deduct rental payments).

Please ensure to consult with your tax professional.

Understanding Triple Net Lease

The potential growth opportunity in net-lease real estate can be tied to the potential benefits for both property owners and tenants.

Triple Net Lease

A net lease is a type of real estate lease in which a tenant agrees to pay additional expenses on top of the base rent. Net leases may be classified as single, double, or triple net leases depending on which ongoing costs are borne by the tenant.

In a triple net lease, the tenant must pay the costs of structural maintenance and repairs in addition to rent, property taxes, and insurance premiums. Given all property level expenses are passed through to the tenant, triple net lease landlords have clear visibility into net operating income, especially compared to traditional gross lease landlords.

Reasons to consider triple net lease

Investors are likely facing challenges in today’s marketplace and our focus on triple net lease investing offers a potential solution.

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Income

We seek to provide predictable, tax-advantaged income for the long-term.

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Capital preservation

We invest in a diversified portfolio of mission-critical real estate assets, triple net leased to only investment grade and creditworthy tenants.3

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Potential inflation protection

Operating expenses are borne by the tenant, offering protection from inflation-driven property expense increases.

Blue Owl’s approach

With an unwavering focus on credit quality, Blue Owl has collected 100% of rents across all funds throughout COVID-19.

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deals completed
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properties owned
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tenant partnerships
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months of consecutive distributions paid to investors4

Investing in real estate through a credit-oriented strategy

Blue Owl’s net lease real estate strategy takes a different approach from traditional real estate, one focused on creditworthiness of the underlying tenant, which is purpose built for today’s market environment.

Illustrative Investment Characteristics Traditional Real Estate5 Blue Owl Net Lease IG Fixed Income

Primary investment objective

Capital appreciation
Income

Realize capital appreciation from active investment management and asset management

Capital appreciation
Income

Generate current income and, to a lesser extent, capital appreciation

Capital appreciation
Income

Generate current income

Capital appreciation
Income

Return composition

Capital appreciation
Income
Realize capital appreciation from active investment management and asset management ORENT Chart 2
Capital appreciation
Income
Generate current income and, to a lesser extent, capital appreciation ORENT Chart 3-1
Capital appreciation
Income
Generate current income ORENT Chart 4
Capital appreciation
Income
Cashflow
Capital appreciation
Income
Variable cash flows
Capital appreciation
Income
Long-term contractual cash flows with escalators
Capital appreciation
Income
Contractual cash flows
Capital appreciation
Income
Creditworthy underlying tenant/borrower
Capital appreciation
Income
Sometimes
Capital appreciation
Income
Always3
Capital appreciation
Income
Always
Capital appreciation
Income
Volatility of capital appreciation
Capital appreciation
Income
Higher volatility
Capital appreciation
Income
Lower volatility
Capital appreciation
Income
None
Capital appreciation
Income
Liquidity
Capital appreciation
Income
Less liquid
Capital appreciation
Income
More liquid
Capital appreciation
Income
Liquid
Capital appreciation
Income
Tax-efficiency of income
Capital appreciation
Income
High
Capital appreciation
Income
High
Capital appreciation
Income
Low
Capital appreciation
Income
Headline risks
Capital appreciation
Income
  • New supply
  • Growing expenses
  • Asset selection
  • Geographic selection
Capital appreciation
Income
Tenant credit
Capital appreciation
Income
Bond credit
Capital appreciation
Income

The graphic above seeks to examine for illustrative and educational purposes only similar characteristics of different types of investments solutions. This is not a comparison of like products but rather an illustration of different products with similar characteristics.

How does Blue Owl source opportunities?

By primarily using sale leasebacks with triple net lease agreements, we typically originate properties directly with a corporate counterparty, often at a discount to market.

Speed and certainty of execution

Blue Owl can quickly close transactions in 30-45 days, providing speed and certainty of execution for tenants who require capital by a certain date.

Our REIT & 1031 Exchange Program

We offer two solutions, ORENT and OREX, that provide investors access points to our Real Estate platform.
Private REIT

Blue Owl Real Estate Net Lease Trust (ORENT)

ORENT is a private placement REIT that primarily acquires, owns, and manages a diversified portfolio of single-tenant commercial real estate properties net leased on a long-term basis to investment-grade and creditworthy tenants.3 ORENT is not available to members of the public, and no offering is made or should be inferred.

Learn more about ORENT
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1031 Exchange

Blue Owl Real Estate Exchange LLC (OREX)

OREX is a sponsor of Delaware statutory trust (DST) offerings designed to provide Internal Revenue Code (IRC) Section 1031 replacement property. Investment in DST interests are suitable for accredited investors.

Learn more about OREX
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Have a question?

Reach out to member of our Private Wealth team today.
Individual investors, please contact your financial advisor for more information.

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Endnotes

  1. Investment grade investment universe based on combined book value of net property, plant and equipment for all publicly traded companies in the United States and Canada. Investment grade investment universe based on combined book value of net property, plant and equipment for all publicly traded companies in North America with an investment grade credit rating from Standard & Poor’s. Source: Standard & Poor’s Capital IQ as of September 27, 2023.
  2. Average annual single tenant transaction volume 2022. Sources: Institutional Real Estate Inc. “Net-leased commercial real estate posts record year” published March 1, 2023, and Colliers research.
  3. Investment grade companies must have "BBB-" rating or higher by S&P or an equivalent rating from a nationally recognized statistical rating organization (NRSRO). Creditworthy refers to businesses that Blue Owl deems financially sound enough to justify an extension of credit or engage in a lease agreement. Tenants are credit worthy or investment grade at time of acquisition.
  4. Since the inception of Blue Owl's net lease investment strategy in 2010.
  5. Based on Blue Owl research on open-end core funds. The terms, investment targets and potential risks of each individual core fund offered by non-Blue Owl sponsors may vary and investors should independently evaluate the risks involved.

Important information

Unless otherwise noted the Report Date referenced herein is as of September 30, 2023.

Past performance is not a guarantee of future results.

Assets Under Management (“AUM”) refers to the assets that we manage and are generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undrawn debt; and (iii) uncalled capital commitments.

The webpage presented is proprietary information regarding Blue Owl Capital Inc. (“Blue Owl”), its affiliates and investment program, funds sponsored by Blue Owl, including the Blue Owl Credit, GP Strategic Capital Funds and the Real Estate Funds (collectively the “Blue Owl Funds”) as well as investment held by the Blue Owl Funds.

An investment in the Fund entails a high degree of risk. Prospective investors should consider all of the risk factors set forth in the "Certain Risk Factors and Actual and Potential Conflicts of Interest" of the PPM or Prospectus, each of which could have an adverse effect on the Fund and on the value of Interests.

An investment in the Fund is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity associated with an investment in the Fund. Investors in the Fund must be prepared to bear such risks for an indefinite period of time. There will be restrictions on transferring interests in the Fund, and the investment performance of the Fund may be volatile. Investors must be prepared to hold their interests in the Fund until its dissolution and should have the financial ability and willingness to accept the risk characteristics of the Fund's investments.

There can be no assurances or guarantees that the Fund's investment objectives will be realized, that the Fund's investment strategy will prove successful or that investors will not lose all or a portion of their investment in the Fund.

Furthermore, investors should not construe the performance of any predecessor funds as providing any assurances or predictive value regarding future performance of the Fund.

The views expressed and, except as otherwise indicated, the information provided are as of the report date and are subject to change, update, revision, verification, and amendment, materially or otherwise, without notice, as market or other conditions change. Since these conditions can change frequently, there can be no assurance that the trends described herein will continue or that any forecasts are accurate. In addition, certain of the statements contained in this webpage may be statements of future expectations and other forward-looking statements that are based on the current views and assumptions of Blue Owl and involve known and unknown risks and uncertainties (including those discussed below) that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. These statements may be forward-looking by reason of context or identified by words such as “may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue” and other similar expressions. Neither Blue Owl, its affiliates, nor any of Blue Owl’s or its affiliates' respective advisers, members, directors, officers, partners, agents, representatives or employees or any other person (collectively the “Blue Owl Entities”) is under any obligation to update or keep current the information contained in this document.

The information presented contains case studies and other discussions of selected investments made by Blue Owl Funds. These discussions provide descriptions and certain key aspects of such investments presented for informational purposes only and are intended to illustrate Blue Owl’s sourcing experience and the profile and types of investments and investment strategies which may be pursued by Blue Owl. The types and performance of these investments (i) are not representative of the types and performance of all investments or investment strategies that have been made or recommended by Blue Owl and (ii) are not necessarily indicative of the types and performance of investments that Blue Owl may seek to make, or be able to make, in the future. Any future investment vehicle that Blue Owl may sponsor or advise in the future, may pursue and consummate different types of investments in different concentrations, than those selected for illustrative purposes in this webpage. Further, references to investments included in illustrative case studies are presented to illustrate Blue Owl’s investment processes only and should not be construed as a recommendation of any particular investment. Past performance of any investment described in these illustrative case studies is not indicative of future results that may be obtained by any Blue Owl funds, and there can be no assurance that any such fund or other vehicle will achieve comparable results.

This webpage contains information from third party sources which Blue Owl has not verified. No representation or warranty, express or implied, is given by or on behalf of the Blue Owl Entities as to the accuracy, fairness, correctness or completeness of the information or opinions contained in this webpage and no liability whatsoever (in negligence or otherwise) is accepted by the Blue Owl Entities for any loss howsoever arising, directly or indirectly, from any use of this webpage or its contents, or otherwise arising in connection therewith.

All investments are subject to risk, including the loss of the principal amount invested. These risks may include limited operating history, uncertain distributions, inconsistent valuation of the portfolio, changing interest rates, leveraging of assets, reliance on the investment advisor, potential conflicts of interest, payment of substantial fees to the investment advisor and the dealer manager, potential illiquidity, and liquidation at more or less than the original amount invested. Diversification will not guarantee profitability or protection against loss. Performance may be volatile, and the NAV may fluctuate.

Performance Information:
Where performance returns have been included in this webpage, Blue Owl has included herein important information relating to the calculation of these returns as well as other pertinent performance related definitions.
All investments are subject to risk, including the loss of the principal amount invested. Credit ratings are provided by an NRSRO at the time of acquisition.

This webpage is for informational purposes only and is not an offer or a solicitation to sell or subscribe for any fund and does not constitute investment, legal, regulatory, business, tax, financial, accounting, or other advice or a recommendation regarding any securities of Blue Owl, of any fund or vehicle managed by Blue Owl, or of any other issuer of securities. Only a definitive offering document (i.e.: Prospectus or Private Placement Memorandum) can make such an offer. Neither the Securities and Exchange Commission, the Attorney General of the State of New York nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or Private Placement Memorandum is truthful or complete. Any representation to the contrary is a criminal offense. Securities are offered through Blue Owl Securities LLC, member of FINRA/SIPC, as Dealer Manager.

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