Hi all - I’m underwriting a property that consists of ground floor retail, small amount of office and a large parking garage. Several of the leases have a “NNN + MF” lease type. Any insights as to what this means/how it impacts the way I should think about this deal? I see MF and just think of Multifamily, but that can’t be the case here.
This isn’t very high-stakes or anything, I’m really just UW this to get practice with parking garages, which is something we haven’t done before but want to explore. Any thoughts you guys have on this (or garages in general) are welcome!
MF likely implies a modified gross lease. Some tenants are paying their retail allocation on a NNN basis and others have a gross lease with some operating expense recovery back to the landlord or direct payment (I.e. separately sub metered utilities).
Thanks for your help! Yea it seems that way based on the ARGUS. There’s a NNN CAM pool that everyone in the non-garage portions pay (the garage space itself is leased to an operator already) and then the rest is all modified with certain exclusions depending on tenant group.
Still not sure what the MF acronym is supposed to stand for, tho. I have a couple websites that compiled tons of RE/financial acronyms but no insight as to what MF means. Maybe refers to some modifications to PRS, because every tenants allocation is hard-coded in the broker model we got.
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MF means Management Fee. Usually this fee is a percentage (typically 3-4%) of the effective gross income at a property and pays a property manager or covers overhead and operations for a property owner with in house management. Not all tenants reimburse for this, though those are typically your big box retailers or national tenants with outstanding credit with leverage in lease negotiations. If tenants aren't reimbursing for this currently then there is a slight value-add play for the NOI to convert these leases to NNN + Management Fee.
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