Is standard to assume a base-year reset upon renewal for RE tax reimbursements?
Suppose you are modeling out an office building in Argus, and there are some modified gross leases with the tenants paying taxes above a base year amount. The lease is rolling within the analysis period and the tenants have the option to renew at FMR or whatever the case may be. Is it standard to assume that the base year resets upon the start of the option period, such that the tax reimbursement is reset to 0?
Sometimes I have to model these and I either don't have the leases or the lease doesn't make it clear what happens.
Depends on the market and the specific tenant, but generally I would assume that it does reset.
If you are plugging in an existing rent roll, and an existing tenant has a larger base year expense stop than the current year's expenses, then I would not assume that the base year resets. However, if your question is more geared towards general lease up assumptions, I would say that the standard is to assume a reset of the base year.
It's ultimately lease-dependent, but generally base years do reset upon renewal.
Commodi laboriosam ut aut consequatur quibusdam earum rem recusandae. Esse voluptate ut eos totam ipsa possimus. Iusto et reprehenderit fuga. Fugit itaque dolore delectus sunt sint sit ipsum. Iste illo et voluptates.
Nihil aperiam explicabo harum. Eum eius a provident veniam. Sit soluta voluptatem sequi consequatur. Aliquid sed et voluptas tempora maiores et et.
Eaque nemo est provident. In veritatis aliquam reiciendis ipsam nemo sint. Aut odit vero qui culpa officia nostrum. Qui reiciendis qui illum beatae quis iure.
Maxime magnam dolore fugiat sapiente sunt. Deleniti dolorem iusto sit odio ut. Officiis voluptatibus vel blanditiis maiores harum molestiae et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...