ABSOLUTE NET
Lease requiring tenant to pay in addition to base rent all costs associated with the operation, repair and maintenance of the building, all real estate taxes, and utilities including repair and maintenance of the building's structure and roof. Often the tenant is directly responsible both for all such costs and for the active handling of the items themselves
ALLOWANCE
A set dollar amount provided by the Landlord under a lease to be used by the Tenant for a specific purpose. Examples include allowances for tenant improvements; moving expenses design fees, etc. If the expense exceeds the allowance amount, such excess is the Tenant's responsibility. If the expense is less than the allowance, the Landlord retains the savings unless their agreement specifies otherwise.
“AS IS” CONDITION
An agreement by a tenant or purchaser that a industrial, commercial or office property is accepted in its current condition as inspected, including any known or unknown defects or deficiencies.
BOMA STANDARD
An international standard for the measurement of industrial, office, commercial or retail space often referred to in the lease agreement.
CAM - COMMON AREA MAINTENANCE
The amount of additional rent charged to the tenant to maintain the common areas of an industrial, commercial or office building or property. The tenants on a pro-rata basis share these charges.
CAPITALIZATION RATE
The rate typically used to calculate or make an estimate on the underlying value of a property based on the Net Income derived from the property. Formula: Net Income divided by Cap Rate = Estimated Value.
COMMON AREA
An area of an office or industrial building that is used in common by tenants and their visitors and generally includes areas such as lobbies, corridors, restrooms etc. This term can also be extended to include the cost of maintaining parking areas, sidewalks, landscaped areas, public washrooms, loading facilities and often form part of the tenant's pro-rata share of the buildings operating expenses.
CONTIGUOUS SPACE
Space that is adjacent to another space or series of spaces. May also be used in describing space that is on a floor either directly above or directly below the vacant space in an office or industrial complex.
DEMISED PREMISES
A term used to describe a location in a multi unit office, industrial or retail building individually divided by walls into a singe space.
DUE DILIGENCE
Activities carried out by a prospective purchaser or mortgager of real property to confirm that the property is as represented by the seller and is not subject to environmental or other problems.
EFFECTIVE RENT/RATE
The actual rent per square foot or amount received by a landlord after deducting free rent, tenant allowance, realtor commissions, and landlord work.
EFFECTIVE USEABLE AREA
Excludes those areas within the industrial and office space that the tenant pays rent on but effectively cannot use such as columns and sharply angled spaces.
ESTOPPEL CERTIFICATE
A legal instrument executed by the one taking out the mortgage (i.e., mortgagor). The owner of a property may require an individual leasing a property to sign an estoppel certificate, which verifies the major points (e.g., base rent, lease commencement and expiration) existing lease between the landlord and tenant.
FACE RATE
The rental rate stated in the formal lease agreement without factoring in inducements or concessions.
FIXTURING PERIOD
The period prior to the commencement date that the tenant uses to renovate or build-out the premises; usually free of base rent and operating costs but often including utilities consumed.
GROSS LEASE
A lease in which the stated rent includes the operating expenses of the building. Same as Fully Serviced Lease, opposite of Net Lease.
GROSS UP
An adjustment made to operating expenses to account for the occupancy level in a building. When operating expenses are "grossed up", it means that the building's variable expenses have been adjusted upwards to the level that those expenses would be incurred if the building was fully occupied (typically 95%).
GROUND LEASE/LAND LEASE
A lease involving the rental of land only, either vacant or exclusive of any buildings on it. Usually a net lease on a long-term basis (20 years+).
GROSS BUILDING AREA
Area shall mean the total constructed area of a building.
GROSS FLOOR AREA
Area shall mean the portion of each floor
GROSS RENTABLE AREA
Measurement of the space to centre walls of the demised space, to the glass on external walls or to the exterior of the outside walls as specifically defined by BOMA Standards of Measurements
NET LEASE
A lease which requires the tenant to pay in addition to base rent, the expenses of the office, commercial or industrial property such as taxes, insurance, maintenance, utilities etc.
NET OPERATING INCOME (NOI)
The net proceeds of income after first deducting all reasonable operating expenses and a vacancy allowance, but before the payment of any service or return on an investment, mortgage cost or income from the producing property.
NET RENT
Net rent is often equated with triple net leasing: as most elements, taxes, maintenance and operating costs are subject to escalation and therefore netted out. Thus, a tenant would agree to pay a certain net rental rate plus their proportionate share of taxes, maintenance costs and operating costs.
OPERATING EXPENSES
The cost for property taxes, maintenance, insurance, salaries, utilities, and similar items paid in connection with the operation of a commercial office, industrial or warehouse property by the landlord. (often referred to as TMI)
OPERATION COSTS
The actual costs associated with operating a property including taxes, repairs, management, utilities, and insurance; which is proportionately charged back to the tenants.
PRESENT VALUE
The present value is the amount that must be invested now to produce the known future value. For any sum invested at a given interest rate, the amount one would receive at the end of the period can be determined by taking the investment times one (1) plus the interest rate of the period to the power of the period. For example, if $10 were invested in an interest rate of 10% for one year, the investment would grow to $11 at the end of the year. It follows, then, that $11 one year from now is worth $10 today; that is $10 is the present value of $11.
RENTABLE AREA
The area of the leased premises computed by measuring to the inside finished surface of the dominant portion of the permanent outer
building walls, excluding any major vertical penetrations of the floor.
No deduction shall be made for columns and projections necessary to the building. The rentable area of an office on the floor shall be computed by multiplying the usable area of the office by the quotient of the division of the rentable area of the floor by the usable area of the floor resulting in the R/U Ratio.
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