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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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a system where property acquired during a marriage is owned equally by both spouses.
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
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