Zero Cash Flow Net Leased Property: Structure, Financing, Advantages, Disadvantages, Tax and Regulatory Considerations
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Finance
- event Date
Thursday, July 31, 2025
- schedule Time
1:00 PM E.T.
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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This CLE webinar will discuss zero net cash flow leased property, where all net operating income services the debt owed on the property. The panel will review the financing, documentation, tax, and regulatory considerations in zero cash flow deals and will highlight the advantages and disadvantages of these types of transactions.
Mr. Marotta assists clients with a range of domestic and international tax issues, including in relation to negotiating and structuring the purchase and sale of businesses, negotiating loan agreements for lenders and borrowers, drafting joint venture agreements (including with respect to real estate matters), advising insurers on representation and warranty policy coverage, structuring inbound and outbound investments, forming investment funds, drafting United States tax disclosures for private placement memoranda and public offerings, and other issues relating to mergers, acquisitions and reorganizations.
Mr. Miller specializes in commercial real estate transactions. Since 1999, he has represented clients in successfully closing over $4 billion of commercial real estate transactions throughout the United States, primarily involving net leased properties. His recent transactions include over $500 million in sale-leasebacks with public companies, such as Rite Aid, Pep Boys and Fleetwood Enterprises.
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.
- Overview: characteristics of a zero cash flow investment
- Creating a zero cash flow investment
- Advantages and disadvantages of a zero cash flow investment
- Tax considerations: Section 467 and Section 1031
- Nonprofit investor considerations: UBTI and ERISA
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?
