Commercial real estate leases known as gross leases often have a so-called expense stop. The expense...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Commercial real estate leases known as "gross" leases often have a so-called "expense stop". The expense stop determines the amount of operating expense per square foot that will be paid by the tenant vs. by the building owner for the duration of the tenant's lease. Between the two statements below, the one that is TRUE is statement # corresponds to your choice from the table below.) (From the drop-down menu pick a number (1 or 2) that #1 Expense stop is the maximum that the tenant may be paying in any given year in operating expense per square foot. #2 Expense stop is the maximum that the building owner may be paying in any given year in operating expense per square foot. STOP A tenant has just signed a gross lease. Assume the operating expenses start at $2 per square foot per year (/sf/yr) during the first year of the tenant's lease. The lease agreement specifies that the expenses stop for the building owner is $3/sf/yr. The building owner expects that after the first year the operating expenses will increase by $0.5/sf/yr each year. Fill out the table below: how much is the building owner expecting to pay for the operating expenses per square foot per year during the first 4 years of the tenant's lease? Year 1 Year 2 Year 3 Year 4 /st/yr $ /sf/yr s /sf/yr $ st/yr Therefore, the owner is expecting that in the 4th year the tenant will contribute /sf/yr toward the operating expenses for the building. Commercial real estate leases known as "gross" leases often have a so-called "expense stop". The expense stop determines the amount of operating expense per square foot that will be paid by the tenant vs. by the building owner for the duration of the tenant's lease. Between the two statements below, the one that is TRUE is statement # corresponds to your choice from the table below.) (From the drop-down menu pick a number (1 or 2) that #1 Expense stop is the maximum that the tenant may be paying in any given year in operating expense per square foot. #2 Expense stop is the maximum that the building owner may be paying in any given year in operating expense per square foot. STOP A tenant has just signed a gross lease. Assume the operating expenses start at $2 per square foot per year (/sf/yr) during the first year of the tenant's lease. The lease agreement specifies that the expenses stop for the building owner is $3/sf/yr. The building owner expects that after the first year the operating expenses will increase by $0.5/sf/yr each year. Fill out the table below: how much is the building owner expecting to pay for the operating expenses per square foot per year during the first 4 years of the tenant's lease? Year 1 Year 2 Year 3 Year 4 /st/yr $ /sf/yr s /sf/yr $ st/yr Therefore, the owner is expecting that in the 4th year the tenant will contribute /sf/yr toward the operating expenses for the building.
Expert Answer:
Answer rating: 100% (QA)
Based on the information provided the correct interpretation of the expense s... View the full answer
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
Posted Date:
Students also viewed these accounting questions
-
The economy of Britannica produces three goods: computers, DVDs, and pizza. The accompanying table shows the prices and output of the three goods for the years 2012, 2013, and 2014. a. What is the...
-
In Chapter 12 (p. 432), we described a study reporting that college students who are on Facebook (or have it running in the background) while studying had lower grades than students who did not use...
-
What is the difference between a Type I error and a Type II error?
-
The 2017 annual report of Trocchi Inc. contains the following information (in thousands): Instructions (a) Calculate the following ratios for Trocchi Inc. for 2017: 1. Asset turnover ratio 2. Rate of...
-
A survey of 1,700 shoppers asked, "Does social media influence your purchase decisions?" The results indicated that 20.3% of females responded that their purchase decisions are influenced by social...
-
How are computers and digital devices used in cybercrime?
-
Grider Companys chart of accounts includes the following selected accounts. 101 Cash..........401 Sales 112 Accounts Receivable....414 Sales Discounts 120 Merchandise Inventory....505 Cost of Goods...
-
By how much does the fluid level rise in the side of the manometer that is open to the atmosphere? By how much does the fluid level rise in the side of the manometer that is open to the atmosphere if...
-
Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 20X8, for $128,000. At that date, the fair value of Roller's buildings and equipment was $20,000 more than book value....
-
PART 2 Problem #2: [35 pts] Write a java program that helps the Lebanese scout to create an online tombola (lottery). Your program should generate a random number between 10 and 99 using...
-
Write the correct java code that checks if variable x is Even. Consider the following mysterious Verilog module. module mystery(c,r,a,s); input c,r,a; output [2:0] s; reg [2:0] s; always @(posedge c...
-
banking application using spring boot that has withdrawal , deposit and show balance functionality Problem Statement Create the following components. Two microservices using Spring boot. One needs to...
-
A company expects sales of $40,000, $48,000, $51,000, and $52,000 for the months of March through June, respectively. The company collects 50 percent of sales in the month of sale, 35 percent in the...
-
QUESTION 1 If Geometric Mean of machine A is 1.5 when machine B is the reference machine. Is machine A is 1.5 times faster than machine B? Why or why not? QUESTION 2 Why do we need Benchmarking?...
-
How do you explain the relatively high conductivity of tap water compared to a low or zero conductivity for deionized, distilled water? Environmental monitoring agencies monitor the conductivity of...
-
Consider the circuit of Fig. 7.97. Find v0 (t) if i(0) = 2 A and v(t) = 0. 1 3 ett)
-
Refer to the Monument Office Building example. What is the leveraged IRR if the loan-to-value ratio is increased to 80 percent?
-
Suppose the correlation between NCREIF and the S&P 500 is -20 percent. How does this change the standard deviation of the portfolio when 50 percent of the portfolio is allocated to each investment?
-
Suppose there is default at maturity and the property sells for 90 percent of the loan balance. What are the returns to the subordinate tranche and residual?
-
The following table shows the interest rates on the fixed and floating borrowing choices available to three firms. Firms A and B want to be exposed to a floating interest rate while Firm C would...
-
Futures contracts are standardized contracts for the delivery of a specified quantity of a commodity or financial instrument on a prearranged future date, at an agreed- upon price. They are a bet on...
-
Derivatives transfer risk from one person or firm to another. They can be used in any combination to unbundle risks and resell them.
Study smarter with the SolutionInn App