Zero Cash Flow Net Leased Property: Structure, Financing, Advantages, Disadvantages, Tax and Regulatory Considerations

Zero cash flow deals are currently in demand and in some markets are selling better than cash flow deals. The characteristics of a zero cash flow property are a highly leveraged asset with long-term financing at a fixed rate, which is guaranteed by an investment-grade tenant.

With a zero net lease, the tenant bears all the property-related risks and expenses and the tenant has the ability to alter the property without waiting for the landlord. The result is a passive real estate investment potentially financeable with low interest, high leverage financing that is not available for conventional multi-tenant properties.

There are both advantages and disadvantages when investing in property with zero positive net income. Real estate counsel must weigh the tax, financing, and regulatory issues that are unique to zero cash flow deals to ensure it is the best fit for their client.

Listen as our authoritative panel highlights the unique characteristics and structures of zero net cash flow leases and provides guidance for navigating these complex transactions.

1. Overview: characteristics of a zero net cash flow deal
2. Current demand for zero net cash flow deals
3. Illustration of a zero net cash flow transaction
4. Advantages and disadvantages of a zero net cash flow lease
5. Structuring issues
6. Financing considerations: sale-leaseback
7. Tax considerations: Section 467 and 1031 exchanges
8. Why investors should consider a zero net cash flow leased property
9. Practitioner pointers and key takeaways

The panel will address these and other key considerations:

• What are the key characteristics of a zero net cash flow lease?
• How do zero net leases work and how are they structured?
• What are the pros and cons of zero net leases?
• What are the financing considerations with zero net leases?
• What are the important tax and regulatory considerations?