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CMCP QUESTIONS - SECTION 2 (INSURANCE) QUESTIONS WITH CORRECT DETAILED ANSWERS.
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CMCP QUESTIONS - SECTION 2 (INSURANCE) QUESTIONS WITH CORRECT DETAILED ANSWERS.
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CMCP QUESTIONS - SECTION 2(INSURANCE) QUESTIONS WITH
CORRECT DETAILED ANSWERS.
What is a building' most valuable asset? - ANSWER- Tenants
Fair rent calculations may apply to options to do what? - ANSWER- Renew, expand, and
periodic rental increases
What will the fair market rental value generally be based on? - ANSWER- Comparable leases of
comparable space
What is comparable space? - ANSWER- 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? - ANSWER- Vacant land or as improved and whether applicable zoning
and other private/governmental restrictions will be considered
What does CAM mean? - ANSWER- Common Area Maintenance
What is a gross lease? - ANSWER- 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? - ANSWER- 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? - ANSWER- 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) - ANSWER- 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) - ANSWER- 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? - ANSWER- 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
What is a ground lease? - ANSWER- Tenant is simply leasing the ground. Tenant is normally
responsible for all costs associated with the ownership of the ground, as well as building and
maintaining the structure. Often seen for retail pad sites or as alternative to a property sale.
What is the basic premise of the net lease? - ANSWER- The building expenses, in addition to
the base rent, are paid for by the tenant, which conveys the risk of year-over-year OpEx to the
tenant
When does rental obligation begin? - ANSWER- On the commencement date stated in the
lease, even if occupancy does not take place on that date
What is commonly described in the additional rent clause? - ANSWER- Expense pass-through
What do pass-through calculations represent? - ANSWER- An agreement between the tenant
and owner concerning a method of increasing rent and/or operating costs in addition to the CPI
increase
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