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CHAPTER 23 LEASES AND PROPERTY TYPES Test Problems 1. A lease in which the tenant pays a rent based in part on the sales of the tenant’s business is known as a: a. Percentage lease. 2. When the tenant pays a base rent plus some or all of the operating expenses of a property, the result is a: b. Net Lease. 3. Existing leases: b. Must be considered more carefully when valuing a multi-tenant office building than valuing an apartment complex. 4. With an expense stop clause: b. The landlord is responsible for operating expenses up to a specified level, above which increases in operating expenses become the obligations of the tenant. 5. As a tenant, you wish to turn over all rights and responsibilities of your unexpired lease term to a new tenant. By doing so, you are: c. Assigning your leasehold interest. 6. Lease provisions that grant the tenant the right, but not the obligation, to do something generally result in: b. A higher base rent. 7. The tenant is responsible for paying property taxes and insurance in a: c. Net-net lease. 8. Which of the following statements regarding tenant improvements (TIs) is the least true in the context of commercial real estate leases? Actually, both b. and d. are equally untrue. 9. In shopping center leases, rents are typically quoted on the basis of what type of area occupied by the tenant? a. Gross leasable area. 10. The typical anchor tenant in a neighborhood shopping center is a: d. Grocery store. 23-1
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Study Questions 1. Assume the owners of a midsize office building recover all operating expenses from their tenants except management and administrative expenses. The total rentable area of the office building is 100,000 square feet. The total amount of
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