UCLA ECON 103 - Chap009 (1) (8 pages)

Previewing pages 1, 2, 3 of 8 page document View the full content.
View Full Document

Chap009 (1)



Previewing pages 1, 2, 3 of actual document.

View the full content.
View Full Document
View Full Document

Chap009 (1)

115 views


Pages:
8
School:
University of California, Los Angeles
Course:
Econ 103 - Introduction to Econometrics

Unformatted text preview:

Chapter 09 Income Producing Properties Leases Rents and the Market for Space Solutions to Questions Chapter 9 Income Producing Properties Leases Rents and the Market for Space Question 9 1 How does the use of leases shift the risk from lessor to the lessee Leases determine how much risk will be borne by the lessor versus the lessee Future increases in market rent are compensated for by including an inflationary adjustment such as a CPI adjustment In the case of a CPI adjustment the risk is shifted to the lessee because the change in rents is not known in advance As the lessee is responsible for any unexpected increases in the level of inflation the lessor is insured that the real value of the lease will be preserved The lessor can shift additional risk to the lessee by including net lease or expense stop provisions in the lease It is important to note however that we would expect the lessor to accept a lower base rent as the burden of risk is shifted to the lessee Question 9 2 What is the difference between base rents and effective rents Base rents reflect rent that will be paid per rentable square foot of leased space It does not include additional items such as finish out costs expense pass throughs and other costs that are included when calculating effective rents Question 9 3 What is meant by usable vs rentable space Usable space is the area actually occupied by the tenant Rentable space is usable space plus a share of common area in a property which is included in the load factor Question 9 4 What are CAM charges These are expenses related to common area maintenance of hallways lobbies etc that are usually prorated and passed on to tenants Question 9 5 What are a pass through expenses b recoverable expenses c common area expenses Give examples of each Pass throughs are expenses such as electricity insurance and property taxes that are billed directly to tenants on the basis of rentable area that they occupy Recoverables are expenses incurred by owners for



View Full Document

Access the best Study Guides, Lecture Notes and Practice Exams

Loading Unlocking...
Login

Join to view Chap009 (1) and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Chap009 (1) and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?