The Base Year is a year that is tied to the actual amount of expenses for property taxes, insurance and operating expenses (sometimes called CAM) to run the property in a specified year.
What does base year mean?
In the calculation of an index the base year is the year with which the values from other years are compared. The index value of the base year is conventionally set to equal 100. Generally, indices in short-term statistics (STS) are calculated on a monthly or quarterly basis.
What is a base year lease?
In a base year lease, a base year is selected (usually the first year of the lease). The landlord agrees to pay the property’s expenses for the base year. The landlord continues to pay the property expenses at the base year level and the tenant agrees to pay its pro rata share of any increases in property expenses.
What does reset the base year mean in commercial real estate?
The “base year” is generally the first year of a commercial rental period that sets a precedent for how much tenants will pay for building expenses for each subsequent year. … At the end of the first year, the landlord calculates the actual per square foot operating costs for the building.
What are base expenses?
Base Expenses means the amount of actual Expenses (as defined below) for the Base Expense Year, with an appropriate adjustment to such amount to reflect the Expenses that would have been paid or incurred by Landlord had the Building been at least ninety-five percent (95%) occupied by tenants for the entire Base Expense …
What is the difference between base year and current year?
In a financial index, a base year is the first of a series of years. It is, generally, set at an arbitrary amount of 100. The new and up-to-date base years are regularly added to keep data current to a database. Any year can be a base year, but analysts typically choose recent years.
How is base rent calculated?
To determine the annual base rent (annual fixed rent or annual minimum rent); the landlord multiplies the total square footage (rentable square feet) by the square foot rate. … For example, 15,000 square feet × $10 per square foot annually equals a annual fixed rent of $150,000 a year.
Can a NNN lease have a base year?
Instead of the actual costs being passed through to the tenant as in a NNN lease, in a base lease the tenant pays the base year rent—the cost of the landlord’s expenses and profit for the first year of the lease.
What is base rent?
What is Base Rent. Base rent usually refers to the stated monthly rental rate in a commercial lease. Base rent also sometimes is called net rent or minimum rent. Base rent may be the same throughout the lease term, or the lease may provide for annual increases in base rent.
Does base rent change?
Units with a base rent less than 80% of CPI may increase rent by up to 8% per year until the rent reaches 81% of average rent as published by RENTcafe. Only one rent increase is allowed every 12 months based upon the regional Consumer Price Index (CPI). Effective July 1, 2020, the annual allowable increase is 3%.
What does Modified gross include?
With a modified gross lease, the tenant takes over expenses directly related to his or her unit, including unit maintenance and repairs, utilities, and janitorial costs, while the owner/landlord continues to pay for the other operating expenses.
What is the most common lease for retail property?
Most Common Retail Leases for Commercial Properties
- Single net lease. A single net lease, or net lease, is an arrangement where the tenant pay for utilities and property taxes. …
- Double net or NN lease. A double net or NN lease is similar. …
- Triple net or NNN lease. …
- Full-service gross or modified lease.