gross up


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gross up

To artificially increase operating expenses in a project for accounting purposes in order to calculate each tenant's pro rata share of those expenses. Most commercial leases provide that actual operating expenses will be increased—grossed up—to what they would be if the project were 95 percent leased.That figure is then divided among the tenants according to their pro rata share of expenses,as determined by their pro rata share of leased space.

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Specific areas requiring close attention in the due diligence process were the asset/liability measurement tests, income acceleration, hedge identification, tax indemnities and gross ups, acceleration clauses, and rating triggers.