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TopicFinancial Factors to Consider When Entering into a Commercial Lease
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A

Abatement: The reduction or elimination of a portion of rent during the lease term. Commonly referred to as “free rent,” “rent abatement” or a “rent concession.” An abatement may be…

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B

Base Rent: Base Rent is the minimum or base amount of rent payment as set out in a lease and is often referred to as “fixed rent.” Generally stated, base…

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C

Capitalization Rate (a.k.a. “Cap Rate”): The rate of return on a real estate investment property based upon the income that the property is expected to produce. A capitalization rate can…

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L

Land Lease: See “Ground Lease.” Landlord Approval | Landlord Consent: A situation in which a tenant must get the permission of landlord before proceeding with its course of action. Generally, situations…

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R

Real Estate Tax (Escalations): Provision in lease agreements where tenant agrees to pay its pro-rata share of any increase in real estate taxes on the leased property over and above a…

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