Lesson 3

Question 1

Consider the following information:

Lease A: Government tenant pays a total of $36,750 per annum, as per a gross lease. Usable area of 2,700 sqft rentable area of 3,000 sqft per a gross lease. Usable area of 2,700 sqft rentable area of 3,000 sqft. Building operating costs and taxes are $5.57 per sqft in 2013.

Lease B: Notary office paying basic rent of $25,507 per annum as per a triple net lease, plus their share of all building cost and taxes as it typical in a triple net lease.
Usable area of 3,923 sqft rentable area of 4237 sqft. Building operating costs and taxes are $6.18 per sqft for 2013

Lease C: Long time tenant, a dentist who is paying $49,556 per annum as per the lease renewal dating back to 2009. The lease specifies that 2009 base year operating costs and taxes are included in the lease payments. The landlord bills the tenant for the operating cost and taxes above the base year.
Useable area of 3,500 sqft rentable area 3,812 sqft. Building operating costs and taxes were $5.33 per sqft for 2009 when the lease was signed. In 2013 they are $6.03 per sqft.

(a) calculate the triple net equivalent and gross equivalent rate of a per sqft basis for the year 2013 for lease A.
(b) calculate the triple net equivalent and gross equivalent rate of a per sqft basis for the year 2013 for lease B.
(c) calculate the triple net equivalent and gross equivalent rate of a per sqft basis for the year 2013 for lease C.

Answer 1

Lease A
Gross: $12.25/sq. ft. = $36,750 ÷ 3,000
Triple Net: $6.68/sq. ft. = $12.25 - $5.57

Lease B
Gross: $12.20/sq. ft. = $6.02 + $6.18
Triple Net: $6.02/sq. ft. = $25,507 ÷ 4,237

Lease C
Gross: $13.70/sq. ft. = $49,556 ÷ 3,812 + ($6.03 - $5.33)
Triple Net: $7.67/sq. ft. = $13.70 - $6.03

Question 2

How do you calculated gross equivalent rate and triple net equivalent

Answer 2

Gross = rent / rentable area

Triple net = gross / rent per sqft