Chapter 9 Income-Producing Properties: Leases, Rents, and the Market for Space) Flashcards
Property types
- residential
- income producing
- mixed use developments
type of property?
- single family household
- condominiums
- co ops
- cooperative apartments
residential
type of property?
- multifamily
- commercial
- recreational
- institutional (special purpose)
income producing
Motivating Factors that generate more profit.
- increase sales
- reduce operating costs
- business type where success requires a higher revenue stream and heavy pedestrian traffic
- starbucks on a hight traffic corner; jewelry store
increase sales
- business type where success is based on a lower cost structure and/or larger amount of land
- factory outside a city; call center
reduce operating costs
- more cost effective than owning
- results in specialized real estate firms
- the exception is for specialized facilities or for headquarters facilities where there are business reasons to won instead of lease
leasing
the price that must be paid by a potential tenant to use (lease) a particular type of space under the current market equilibrium
market rent
- outlook for national economy
- economic base of the area
- demand
- supply
market rent
- tenant turnover
- spance is not always leased even in strong markets
vacancy
is the tenant the lessee or lessor?
lessee
- financial statements
- credit ratings
- analysts reports
- bank relationships
- existing obligations
underwriting tenants
- Parties, Dates, Length
- Base rent
- Deposits, guarantees, LOC (letter of credit)
- Condition of space,
- TI’s (tenant improvements)
- Allowable uses
- Restrictions on assignment or subletting
- Use of common areas and facilities
- Responsibility for maintenance and - repair
- Restrictions on alterations or improvements
- Construction “non-disturbance” clause
- Responsibility for payment of specific expenses by lessee and/or lessor (recoveries)
- Insurance (both parties)
- Lease renewal options
- Estoppels (certificates)
- Rent quotes normally “per square foot - per year”
general contents of leases
minimum rent and any methods that will be uses to calculate and adjust future rent. Description of any concessions and other inducements to be provided to the tenant by the landlord
base rent
Responsibility for payment of specific expenses by lessee and/or lessor
recoveries
