Real 1820 Midterm 2 week 7

Question 1

Distributive Bargaining:

Answer 1

negotiating over a fixed price

Question 2

Target Point

Answer 2

The point at which a negotiater would like to conclude negotiations

Question 3

Resistance Point:

Answer 3

Negotiators bottom line or point at which negotiator is indifferent to a deal

Question 4

Gross Rent Occupancy Cost (GROC)

Answer 4

% of he company’s revenue spent on rent

Question 5

Bargaining Zone

Answer 5

The space between the resistance points of each negotiator also known as the zone of potential agreement

Question 6

Lunch/ social business interactions (BATNA)

Answer 6

the best alternative to a negotiated agreement, which may be saying no and walking away

Question 7

Types OF Lease Payments: Gross Lease

Answer 7

tenant pays fixed rental amount and consumer pays other expenses for the property

Question 8

Types OF Lease Payments: Net Lease

Answer 8

tenant pays some or all expenses of the property in addition to the rent
net ( tenant pays taxes)
net net(Taxes and insurance)
triple net Taxes, insurance, maintanence)

Question 9

Types OF Lease Payments: Percentage Lease

Answer 9

• fixed base rent plus a percentage of the tenants gross income in excess of a set amount

Question 10

Rentable Square Feet =

Answer 10

Usable square feet + portion of the building common space x (usable sf/total building sf)

• used to determine annual base rent expense

Question 11

Net Effective Rent (NER)

Answer 11

total sum of money you receive annually from a particular property - costs

Question 12

Pro Forma

Answer 12

a financial analysis of a property for a specific period (1-5 years) and includes projections for income, the vacancy factor, operating expenses and debt services

Question 13

When is a pro forma prepared?

Answer 13

for new developments, refinancing properties or for the sale or purchase of a new property

Question 14

Market Rate

Answer 14

Important to stay current on what’s happening in the market to
ensure your market rate is accurate and competitive.
- Avoid backing into rental rates different property types do not increase or decrease at the same rate (ie Class A vs B office space)

Question 15

who pays Commission : property owner/landlord

Answer 15

depends on
1) comission rates
2.) brokerage split
3.) number of agents involved

Question 16

Tenants Inducements (T”Is)

Answer 16

When there is more supply than demand, or if you want to attract a
certain tenant, landlords may offer leasehold inducements.

This can include (but not limited to):
1.) free rent period
2.) Costs to renovate the unit
3.) Moving expenses

Question 17

Lease Term: Possession Date

Answer 17

the date tenant receives the keys from the landlord. The period between possession and commencement is known as the fixturing period. Agreed upon landlord work is typically completed before tenant possession

Question 18

Lease Term: Commencement Date

Answer 18

the date the tenant is expected to open for business, rent commemences

Question 19

Category Average per square foot formula:

Answer 19

Total sales/ total sf = category average