A tenant leases 5,000 square feet of office space at $24 per square foot per year under a triple-net lease. Annual property taxes are $15,000, insurance is $5,000, and CAM costs are $10,000 for the building's 50,000 total square feet. What is the tenant's total annual cost including the NNN expenses?
Correct Answer
B) $123,000
Base rent = 5,000 × $24 = $120,000. Tenant's share of NNN = 5,000/50,000 = 10%. NNN costs = ($15,000 + $5,000 + $10,000) × 10% = $30,000 × 0.10 = $3,000. Total = $120,000 + $3,000 = $123,000.
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A commercial landlord offers a new tenant a rent-free period of three months at the beginning of a five-year lease. What is this incentive commonly called?
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A commercial real estate broker is explaining lease types to a prospective tenant. All of the following are characteristics of a ground lease EXCEPT.