Tenant Relations & Retention Flashcards

What is the term for the period during which a new tenant pays reduced or no rent while preparing their space for occupancy?

Answer: Free rent or rent abatement period

Free rent or rent abatement is the period at lease commencement when the tenant pays no base rent, compensating for the time needed to build out and open for business.

In a lease abstract, what information is MOST critical for an appraiser to extract regarding tenant retention?

Answer: Lease expiration dates and renewal option terms

Lease expiration dates and renewal options directly determine when income is at risk and whether tenants have contractual ability to remain, which is central to stability analysis.

A landlord who fails to maintain essential services (heat, water, electricity) may expose themselves to a claim of:

Answer: Constructive eviction

Constructive eviction occurs when a landlord's failure to maintain habitable conditions effectively forces a tenant to vacate, even without a formal eviction proceeding.

Which of the following BEST describes 'anchor tenant' strategy from a retention perspective?

Answer: Offering anchor tenants favorable rents to drive foot traffic benefiting the entire center

Anchors receive favorable (often below-market) rents in exchange for their draw power, which generates foot traffic that sustains smaller inline tenants and overall center performance.

When a commercial tenant assigns a lease to a new business entity, the original tenant's liability to the landlord is typically:

Answer: Retained unless the landlord specifically releases the assignor

In a lease assignment, the original tenant typically remains contingently liable unless the landlord executes a formal release or novation substituting the new tenant.

How does tenant mix diversity in a multi-tenant property MOST directly support income stability from an appraisal perspective?

Answer: Varied lease expirations and industries reduce correlated vacancy risk

Diverse tenant industries and staggered lease expirations mean that economic downturns or sector-specific issues are less likely to cause simultaneous vacancy across the entire property.

A lease that allows rent to increase by the lesser of CPI or 3% per year is BEST described as providing what kind of protection?

Answer: Inflation protection for landlords with an upside cap

The 'lesser of CPI or 3%' structure protects the landlord from inflation eroding income while capping increases at 3%, which benefits tenants when CPI exceeds that threshold.