expense stop

expense stop

In a commercial lease, a provision that annual rent escalations due to increasing building operating expenses will be stopped,or capped,at a certain amount of increase per year or over the lifetime of the lease.

References in periodicals archive ?
Roundstone's medical expense stop loss programme, Mid-Market Med, offers middle-market companies (20-1,000 employees) control over their health insurance costs through self-funding methods historically used by larger companies.
Moonguard's $9.00 expense stop resets to a 2006 Base Year effective 11/01/205, while The Green Company's $8.00 expense stop remains constant throughout the analysis.
The firm was able to lower its current remaining rental obligation substantially and obtain a new base-year expense stop. More importantly, two months after the lease was executed, a larger tenant recast its lease, the building took on a new direction and pulled all its previously tendered proposals off the table.
This math can be daunting, especially if a building has a significant number of leases, or if energy and other operating expenses were combined into a single base year or expense stop. Fluctuations in various operating expenses over time, renewal probabilities and many other factors can further complicate the analysis.
Some leases specify the expenses incurred during a "base year" while others specify a dollar amount, often referred to as an "expense stop" In either case, make sure that the base is adjusted to reflect what the expenses would be had the building been 100% occupied.
Also consider, however, that a given lease's expense stop typically includes both utility and non-utility operating expenses and that actual expenses in both of these categories fluctuate from year to year, even though the total expense stop remains unchanged.
FIGURE 1 Two Lease Deals Terms: $12.50 psf for base rent $4.75 psf expense stop $10.00 psf for TIs, 6.0% LCs Deal A--$3.75 psf Deal B--$2.25 psf Deal A Deal B 5 years 3 years Income $12.50 $12.50 Expenses (4.75) (4.75) NOI $ 7.75 $ 7.75 TIs (2.55) (3.87) LCs (0.96) (0.87) Cash Flow $ 4.24 $ 3.01 All numbers are annualized and on a psf basis TIs and LCs are amortized at a 10% annual interest rate compounded monthly
Lines 65-69 represent the projected expenses for which the tenant is responsible, over and above the amount provided by the owner as an expense stop. Expense stops are expressed in dollars per square foot of rentable area.
And if you know that the money you fork out for the carpet is for the good cause of building a shelter and hospital for animals, the expense stops seeming to be a mere indulgence.
Henrik is reportedly paid pounds 30,000 per week, so it will take him less than a month to earn enough to pay for the car - but that's not where the expense stops. Average quotes for the 360 Modena, which has a maximum insurance group rating of 20, are around pounds 2000.
Operating expense stops: Do you have operating expense stops in your leases, and if so, what is your base year?
However, it would also include specific property-level assumptions such as leasing of existing vacant space, miscellaneous revenue, operating and tax expense stops for the upcoming year, and expected tenant improvement costs.