CRE Acronyms
PRS
Pro-Rata Share?
YTD & MTD
Year-to-date &
Month-to-date
OFB / DOP
Open for Business
Delivery of Premises
What does MEP stand for?
Mechanical, Electrical, Plumbing
What is a base year?
The first calendar year of a tenants commercial rental period.
What is holdover and what is the typical rate you see?
Holdover is the increased rental rate of Base Minimum Rent (BMR) should a tenant remain in their space beyond the lease expiration date.
Typical rate you see is 150%
What is a guarantor responsible for?
They are responsible to perform the contractual obligations of a lease if the other party shall fail to so perform. Guarantors for lease obligations may either be personal or corporate.
What is cotenancy?
A clause which provides remedies to a tenant in the event that another tenant (typicaly an anchor or jr. anchor) ceases operations at the property.
Explain what recoup means.
Operating expense recovery - how much of the expense is recovered by the tenants.
GLA
Gross Leasable Area?
KPI
Key Performance Indicator
TIA
Tenant Improvement Allowance
What is an RFP? Who prepares it?
Request for Proposal - the person who is requesting bids from multiple parties (typically a Property or Construction Manager).
What is an exclusive? Give an example.
An exclusive use clause, or "exclusive" reflects the agreement of the Landlord to not allow any other tenants within the center to use their respective premises for a specific use, whether selling certain products or providing certain services. i.e. grocery store, pizza, beauty supply, discount variety, etc.
What is an option?
A material consideration granted to a tenant in a lease - example could be several option to extend their lease at Fair Market Value, a ROFO or a ROFR.
What does it mean when a tenant goes dark?
When a tenant ceases operations at a property.
What is a control area?
An area in the common area outside of a tenant space in which a tenant's lease allows them control for approvals.
Explain percentage rent and in which situations you would see it the most.
A form of rent paid into addition to, or in lieu of, BMR, specifically pertaining to a tenant's percentage of gross sales. It can be paid with or without a breakpoint.
PCA or PCR
Property Condition Assessment
or Property Condition Report
FMV
Fair Market Value
BMR
Base Minimum Rent
What is a retail stacking plan/standard?
The way/plan for which vehicles will be "stacked" or placed to accommodate ingress/egress, most directly tied to drive-through use.
What is a LCD and RCD? Explain the differences
LCD - Lease Commencement Date
RCD - Rent Commencement Date
The lease may commence on a certain date but Base Minimum Rent (BMR) can start on a separate date depending on lease provisions (most especially if a construction period is allowed).
Explain an expense pool.
Different operating expense categories in which different tenants participate in. Most commonly you see insurance and tax in a different category and sometimes you can see trash removal, Fire & Life Safety and roof. Different expense pools change the denominator and a tenant's PRS of that expense category.
What does writ of possession mean?
An order from the court after allowing LL to take back legal possession of the space and forces the current tenant out.
What is a blackout period and what dates do you typically see for them?
A period or months indicated in a tenant lease that prohibits work to be done in the common area. You can sometimes see this in major tenant leases where they do not allow construction at any time from October through December.
What is the industry standard percentage for a management fee in commercial real estate?
3% to 5%
FF&E
Furniture, Fixtures & Equipment
CMU
Concrete Masonry Unit
LOI
Letter of Intent
What is the difference between a grey shell and white or vanilla shell (a.k.a grey box or white box)?
A grey shell/box is unfinished and can have exposed wiring, unfinished floors, plumbing and electrical. White/vanilla shell/box is finished with drywall and ready for tenant finishes.
What is force majeure?
A lease clause the protects one or more parties (usually the LL) from liability in the event of a major unforeseen event ("acts of God") such as natural disasters, endemics, pandemics, government acts and labor strikes
What is a breakpoint?
The point in which additional rent kicks in. This applies to percentage rent when a tenants gross sales exceed a certain dollar amount (breakpoint) and they begin to pay a percentage of their sales, most often in addition to their BMR.
Explain the general meaning of a cure period.
The time for which a tenant can "cure" or remedy a default - whether it's by monetary (paying their balance in full) or by fixing whatever item they were defaulted for (non-monetary default).
What is a no-build area?
A specific location in the common area where a tenants lease indicates LL cannot build upon.
Explain controllable expenses and give 3 examples of them.
All operating expenses which are within reasonable control of LL (landscaping, lighting, parking lot R&M, lot sweeping). Noncontrollable expenses are taxes, insurance, utilities and other costs beyond LL control.
GAAP
Generally Accepted Accounting Principles
CTI
Cam, Tax, Insurance
EUL
Expected Useful Life
What is a studor vent and where do you commonly see it on a commercial property?
A studor vent is a type of plumbing fixture that contains a one-way diaphragm valve to allow air into drain pipes while preventing sewer gases from escaping. Best found on a roof.
What is a ROFO and ROFR?
What's the difference between the two?
Right of First Offer - the right of tenant to match the terms of a proposed contract before it's executed.
Right of First Refusal - the right providing tenant the first option of leasing a particular available space before LL offers it to third parties.
The key difference is that a ROFR has the existence of a Third-Party offer.
CAM cap - explain what it is.
The limit or ceiling "cap" on the amount of CAM expenses that tenants are responsible for. This means if a CAM expense exceeds the cap, the tenant is not required to pay anything additional of such cap.
What happens to FF&E at the natural lease expiration?
It stays with the space if there is no leasehold interest in it.
What are typical expenses that you see as CAM Exclusions?
Management Fees, Admin Fees, CAPEX, legal fees, marketing or promo fees
What is the difference between CAM, Amortized CAM and CapEx?
CAM - Expenses are passed through within the year it is incurred. Expenses are not depreciable.
Amortized CAM - Expenses are typically large projects that are passed through on an amortized basis through the reconciliation starting in the year the project was completed. Most Amortized CAM expenses are not depreciable.
CapEx - Expenses are major replacements. They are still amortized and passed through in the same manner as Amortized CAM. All capital expenses can be depreciated.
SOX
Sarbanes Oxley
(A methodology of compliance that requires publicly traded companies to establish financial reporting standards, logging electronic records for auditing and proving compliance.)
REA/OEA
Reciprocal Easement Agreement or
Operation and Easement Agreement
SSNOI
Please explain it as well.
Same Store Net Operating Income
A properties income less operating expenses.
We want to see growth every year in the SSNOI to assure our shareholders that our properties are performing well.
What is a building fenestration and list two common types of it.
It is a reference to openings in the building envelope - windows, doors and skylights.
What is a denominator?
How does a denominator change? Please explain
The denominator is the defined area or dividable number in which a PRS is calculated.
A denominator can change when different tenants participate in different expenses (i.e. anchor tenant does not pay into waste so the denominator is the GLA minus that anchor space).
What is a CPI?
Consumer Price Index - a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. CPI increases (and sometimes decreases) in rent required to be paid by a tenant based upon the CPI changes over a specified period of time.
What is a kickout clause and another name for it?
A “Kick-out Clause”, also known as a “Cancellation Clause” is a clause in a lease in which a landlord can evict a tenant or a tenant may vacate the space, after a certain period of time has passed, if certain needs or threshold's are not met.
Explain what use restrictions are. Give me an example of one.
Prohibited uses within a shopping center. Examples are sale of adult or pornographic materials, manufacturing plants, car washes, funeral homes, car or motorcycle sales, flea markets, etc.
Why would a recovery (recoup) be so low for a property? Can you explain?
CAM Exclusions, fixed CAM, Gross leases, CAM caps