CMCP Questions and Correct Answers- Section 2 (Insurance

What is a building' most valuable asset? Tenants Fair rent calculations may apply to options to do what? Renew, expand, and periodic rental increases What will the fair market rental value generally be based on? Comparable leases of comparable space What is comparable space? The comparable space must be in a building and area comparable to the premises. (geographically, highly prominent space, age of the building, configuration of a center, type of tenants in the building, premium amenities) In making rent comparisons for a ground lease, it is important to state whether the premises will be appraised as what? Vacant land or as improved and whether applicable zoning and other private/governmental restrictions will be considered What does CAM mean? Common Area Maintenance What is a gross lease? Tenant pays only base rent and landlord pays for all OpEx. Used in many office leases, especially older buildings What is a modified gross lease? Items spelled out that require additional payment by Tenant. Typically utilities and real estate taxes are excluded. Used in many suburban office leases. What is a single-net lease? Base rent is paid to landlord and included OpEx incurred by the landlord. Tenant pays property taxes separately. Was commonly used for industrial buildings/warehouses in the 70s and 80s but not as common today. What is a double-net lease? (net-net) Base rent is paid to the landlord and includes OpEx. Tenant pays property taxes and insurance separately. Was commonly used for industrial buildings/warehouses in the 70s and 80s but not as common today. What is a triple-net lease? (net-net-net) Rental payments are base rent paid to landlord and do not include OpEx. Landlord undertakes management of property at the tenant's expense. First used with single-tenant buildings but now common with large portfolio landlords, especially in urban markets What is an absolute net lease? Similar to triple-net with even more items being paid for by the tenant. All cost of owning, maintaining and operating the building paid for by the tenant and usually paid directly to the providers of the services. Almost always used in a single-tenant building and in cases where the lease is primarily a financing tool