Real estate investment trusts (REITs) have struggled over the past 18 months as the Federal Reserve aggressively hiked the federal funds rate to combat inflation. This has raised the financing costs of these companies, and since they often trade based on their dividend yield, they have fallen in tandem with the bond market. Office and retail commercial real estate, meanwhile, have been under pressure this year over concern that maturing debt will have to be refinanced at much higher interest rates. NNN REIT (NYSE: NNN) is a large retail REIT with a nationwide presence and a 5.7% dividend yield. Is the dividend sustainable? 

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NNN REIT is a triple-net lease REIT, which means it focuses on single-tenant properties under the triple-net lease structure. Most leases are called gross leases, where the tenant is responsible for paying rent and not much else. If you rent an apartment, you probably have a gross lease. A triple-net lease requires the tenant to absorb most of the property's costs, including taxes, insurance, and maintenance. These leases generally last more than 10 years and have automatic rent escalators. They are expensive to break, which means effective tenant choice is a must. 

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Source Fool.com