This office lease form describes an operating cost escalations provision.In the event that the operating costs for any calendar year during the term of this lease shall be greater than the base operating costs, the tenant will pay to the landlord additional rent of an amount equal to such an increase.
Mecklenburg North Carolina Operating Cost Escalations Provision
State:
Multi-State
County:
Mecklenburg
Control #:
US-OL19034A
Format:
Word;
PDF
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How to fill out Operating Cost Escalations Provision?
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FAQ
Operating Expense Escalation means a sum payable by Tenant to Landlord each Lease Year computed by multiplying the sum representing the Base Year Operating Expenses as defined under Subsection A.
An expense stop is a tool used by landlords to limit their exposure to operating costs, and as such helps to maintain predictable operating expenses over the term of a lease.
A cumulative cap sets a ceiling on the annual increases in CAM expenses that can be passed on to a tenant. The cumulative nature of this cap allows the landlord to recover any unused increases from prior years.
The Operating Expense Formula Operating Expense = Salaries & Wages + Rent Expense + Insurance Expense + Repairs & Maintenance Expense + Utilities Expense + Travel Expense + Supplies Expense. Operating Expense = the sum of all operating expenses. Revenue Cost of Revenue Operating Expense = Income from Operations.
Expense stops. when the tenant pays increases in operating expenses.
An increase in rent because a clause in the tenant's lease provides that as the building operating expenses increase above what they were in a base year,the tenant will pay its pro rata share of those increased expenses.
The pro-rata share is the percentage of expenses shared by the tenant for the shopping center or office building. In most leases, the pro-rata share is calculated as a fraction of the tenant's demised square footage divided by the total square footage of the shopping center or the building.
Year-over-year cumulative CAM cap. These caps are calculated by applying the cap percentage to the prior year's expenses. Example: If expenses in the base are $200,000 and the cap is 5%, the cap for year one becomes $210,000. If actual expenses for that year are only $205,000, the cap does not apply.
A mechanism in a Full Service Gross Lease, the Expense Stop is a fixed amount of operating expense above which the tenant is responsible to pay. Thus, the landlord is responsible to pay for all operating expenses below the Expense Stop, while the tenant is responsible for any amount above the Expense Stop.
Operating expenses include all of the costs associated with operating the property. These include property management fees, insurance, utilities, property taxes, repairs, and maintenance.
