Commercial real estate lease LOI

5 Replies

The statement below appeared in my LOI.

“ The estimated triple net expense reimbursements for the first year are yet to be determined?”

Can someone help me to understand what it means?
What are potential expenses that a commercial tenant would be responsible for?

Real estate taxes, insurance, common area maintenance charges.

They haven't been determined yet because the costs of the items Tom Gimer mentioned are put together at the end of the year and reevaluated every year. Some years can cost more more than other, thus, the expenses that are passed onto the Tenant fluctuate accordingly.

Hi Randy - 

Based on the language, I wonder if this is new construction. Please clarify. Even so, they should have a "projected" NNN figure on a per square foot basis. If it's existing construction, then they should be able to provide the current figures on a per SF basis. Also, ask them what exactly they are calling triple nets? Pro-rata share of real estate taxes, common area maintenance, and insurance. And if this is a multi-tenant building, ask them if the other tenants have NNN leases or gross leases. Thanks Damon

Originally posted by @Tom Gimer :

Real estate taxes, insurance, common area maintenance charges.

Exactly. Ask the property manager or one of the brokers to provide the NNN expenses for last year.

Thank you everyone for your insight it was very helpful!!

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