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34 Cards in this Set
- Front
- Back
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Leased Fee Interest
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Owner's bundle of rights and obligations
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Leasehold Interest
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The tenant's bundle
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Fee Simple Interest
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The owner's interest in the property, without consideration of the leases
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Sublet/Assign
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Sublease
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Sandwich Leasehold
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When the value of the property is divided among the owner/lessor(leased fee), primary tenant(leasehold estate/interest), and subtenant(sandwich leasehold)
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Gross Lease
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Landlord pays all expenses associated with operating and maintaining the property.
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Net Lease
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The tenant pays all or some of the operating expenses. Usually obligates the tenant to pay annual property taxes
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Net-Net Lease (Double-Net)
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The tenant pays both property taxes and hazard/fire insurance
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Net-Net-Net Lease (Triple-Net)
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The tenant is responsible for all operating expenses
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Expense Stop
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Owner pays operating expenses up to a specified amonut, usually stated as an amount per square foot of rentable space in the building
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Fixed Rent
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Contract rents are fixed for the duration of the lease
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Step Lease
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Contract rents on long-term leases change by preset amounts or percentages on predetermined dates, such as every two years, five years etc.
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Indexed Leases
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Contract rent is indexed (i.e. tied) to movements in a prespecified index, usually the Consumer Price Index (CPI)
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Percentage(Overage)Rent
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Percentage Rent is additional rent (over a base amount) that is paid by tenants to owners on tenant sales over a certain dollar amount.
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Ground Lease
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Ultimate Net Lease, landlord "stays away and collects rent"
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Sale-Leaseback
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Company will purchase land, build for its own use, and then sell the entire property to an investor, retaining a long-term net lease.
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Land sale-leaseback
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Same concept as sale-leaseback, but sell land only, taking a ground lease
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Owner's Leased Fee Interest (Rights & Obligations)
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In return for permitting tenant to use property, lessor receives:
-periodic rental payments -right to repossess the space upon termination of the lease -value of the periodic rental payments plus the value of the property at the end of the lease term (the reversion) constiutes the leased fee interest. Leased fee can be sold or mortgaged, depending on the terms |
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Requirements of a Valid Commerical Lease
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-Names of owners and tenants
-Legal description of property -Consideration -Legality of objective -Offer and Acceptance -Written Form |
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Annual Effective Rent
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Total net cash flow in each period of a lease, including the tenant's share of operating expenses and any rental concessions
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Annual Effective Rate
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Annual Effective Rent/# of Sq. Ft.
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Average Annual Effective Rent
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Total CFs / # of yrs.
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Average Annual Effective Rate
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AAERe / # of sq. ft.
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Effective Rent
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Annual base rent adjusted downward for concessions and allowances and upwards for costs that are the responsibility of the tenant (such as operating expense pass-throughs)
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Expense stop
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The level (or maximum) up to which the landlord will pay certain operating expenses. The amount beyond the "stop" is the amount the tenant is responsible for.
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Gross Area
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The entire interior floor area of a building or floor
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Gross Leaseable Area (GLA)
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The definitive measure of retail space is its sq. footage, expressed as Gross Leaseable Area (GLA). Refers to both the shopping center as a whole and the individual store interiors
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Rentable Area
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The gross area of an office building, less vertical penetrations (i.e., stairways and elevators). Essentailly, the same as GLA
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Tenant-paid tenant improvement (TPTI)
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The total cost (outlay) of necessary tenant improvements paid by the tenant
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Useable Area
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Rentable area less common areas
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Advantages of Leasing
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-Flexible Financing
-Ability to effectively depreciate land -Low risk of obsolescence -Source of financing -Stability of costs |
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Disadvantages of Leasing
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-Cost
-Loss of the asset's salvage value -Contract |
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Advantages of Owning
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-Control
-Tax Savings -Appreciation |
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Disadvantages of Owning
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-Initial Capital Outlay
-Obtaining Financing -Liability -Risks |
