Asset and Property Management Flashcards

A commercial property manager receives a request from a tenant to assign their lease to a new operator. What does the typical lease assignment provision require?

Answer: Landlord consent, which may not be unreasonably withheld under many standard leases

Most commercial leases require landlord consent for assignment, and many include 'not unreasonably withheld' language to prevent arbitrary denial.

Which of the following best describes 'effective gross income (EGI)' in a commercial property's financial model?

Answer: Potential gross income minus vacancy and credit loss plus other income

EGI equals potential gross income minus expected vacancy and credit loss, plus ancillary income such as parking or laundry fees.

In commercial real estate, what is a 'holdover tenant' and what risk does it present to the landlord?

Answer: A tenant who remains in occupancy after lease expiration without a new agreement; creates legal ambiguity and may block re-leasing

A holdover tenant occupying space after lease expiration can complicate new lease negotiations and may default to month-to-month or double rent provisions.

A retail asset manager notices that a tenant's percentage rent clause has never been triggered in three years. What does this most likely indicate?

Answer: The tenant's gross sales have never exceeded the natural breakpoint

If percentage rent has never been triggered, the tenant's sales have remained below the natural breakpoint at which percentage rent kicks in.

Which document provides a detailed inventory of a property's physical condition and remaining useful life of major systems, essential for capital planning?

Answer: Property Condition Assessment (PCA)

A Property Condition Assessment (PCA) evaluates structural, mechanical, and electrical systems to forecast capital expenditures over a defined horizon.

What is the primary function of a 'lockout period' in a commercial loan on an income property?

Answer: It prohibits the borrower from prepaying the loan during a specified early period

A lockout period protects the lender by preventing early loan prepayment, ensuring the lender receives the anticipated interest income.

Under the Americans with Disabilities Act (ADA), who bears the primary responsibility for ensuring a commercial building's common areas are accessible?

Answer: The property owner/landlord

The ADA places primary responsibility for common area accessibility compliance on the property owner, though leases may allocate some obligations to tenants for their premises.