Qualification of Prospective Tenants

I have put together a Tenant qualification criteria which could be useful to help to qualify prospective tenants leasing retail space.

Qualification of Prospective Tenants

To qualify a Tenant at least two (2) of the following conditions must be met:

1. Have a existing location
2. Minimum Five (5) years experience in same business
3. Have Tenant personally sign the lease and have a credit score above of 640.
4. Sign personal warranty and a two (2) months deposit
5. Be or have a National Franchise
6. Invest in a full leasehold improvements of at least ONE HUNDRED ($100.00) DOLLARS per square foot.
7. Personal financial statements to show a net worth of at least $250,000.

Once prequalified, tenants must fullfill the following

1. In case of a local business, must present a sound business plan.
2. Business Financial Statements to show at least four (4) months reserve to operate the business.
3. Have an advertising plan according to the nature of the business.

9700 Stirling Rd

ID# 1916337 Public Listing

9700 Stirling Rd

Hollywood, FL 33024

Property Type:

Office for Sale Medical

Sale Price:	$1,225,000
Unit Price:	$295.32 Per SF
Property Status:	Existing
Class of Space:	Class A
Gross Building Area (GBA):	4,148 SF
Building Size (RSF):	4,148 SF
Sale Terms:	Other
Last Updated:	9/8/2009

Property Overview

Please contact the agent for more information about this listing.

Professional Office, Retail, Medical or Day Care Building

ID# 2012299 Public Listing

3255 Forest Hills Blvd.

Westwest Palm Beach, FL 33406

Property Type:

Office for Lease General, Medical, Mixed Use, Office Building

Rental Rate:	$20 PSF (Annual)
Monthly Rent:	$15,000
Lease Types:	Absolute NNN
Contiguous Space:	9,000 SF
Total Available:	9,000 SF
Building Name:	3255 Forest Hill Blvd.
Property Status:	Under Construction
Class of Space:	Class A
Gross Building Area (GBA):	8,937 SF
Building Size (RSF):	9,000 SF
Last Updated:	9/11/2009

Property Overview

70% completed 9000 s.f. building. Can be sub divided into 8 separate spaces or used as whole. Excellent for Day Care Center, retail, medical or other special use. Flexible zoning and owner financing available. Across from Palm Beach School Board administrative building

Leasing Retail or Office Space

Prorated Expenses (T.I.M vs. C.A.M)

The leasing "standard" for Retail space and office space now days have become NNN leases. Rent is composed of the base rent and additional rent, both expressed in dollars per square feet per year. Each of the N's refers to: Property Insurance, Property Taxes and Overall Maintenance. Each year these expenses have to be budgeted to have the estimated NNN expense for the year; the Landlord budgets the expenses for insurance, for property taxes and for maintenance and provides the Dollars per Sq Ft per Year as a prorated basis the Tenant will have to pay as additional rent. These expenses can be grouped in two types, the controllable expenses and the uncontrollable expenses; property taxes and property insurance are defined as controllable expenses whereas overall or common area maintenance is referred as controllable expense.

At the end of the fiscal year the Landlord performs a reconciliation of the NNN expenses with the budgeted amount and either credit or charges to the Tenant in a prorated basis the difference. Reconciliations should be timely and accurate, and they should be provided in sufficient detail so the Tenant can readily understand the difference between budget vs. actual, and the reasons for the difference

There are some variations to this "standard"; the N Leases and the NN leases. In any case it is important to identify what each N stands for before staring to negotiate a lease.

Usually the NNN expenses are defined with the word CAM; in fact it is a common practice to call the reconciliation of the expenses: "CAM" reconciliation.

The term "C.A.M" stands for "Common Area Maintenance", however this term is being widely used to describe the "NNN" additional rent that a Tenant must pay the Landlord to cover for Property Taxes, Property Insurance and Property Maintenance. I strongly believe that the use of this term brings misinterpretation to the definition itself. To better understand these definitions, I would like to present some concepts for "CAM" as follows:

• Common Area Maintenance (CAM): This is the amount of Additional Rent charged to the tenant, in addition to the Base Rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, repairs, waste removal painting, etc.
• Common area maintenance (CAM): An additional, annual charge often assessed to tenants for maintenance of the property's "common area", such as its entryways, hallways or bathrooms.

I could add some other definitions arriving to the same basic concept: "Maintenance/Management Performed in the Common Areas of the Property". It is a mistake and a misconception to utilize the term C.A.M. to define the NNN pass-through which includes Taxes, Insurance and Maintenance.

A most proper term should be T.I.M. which stands for Taxes, Insurance and Maintenance. The T.I.M. can be defined as:

• Taxes, Insurance and Maintenance/Management (T.I.M): This is the amount of Additional Rent charged to the Tenant, in addition to the Base Rent, to cover for the Property Taxes, The Property Insurance and to Maintain and Manage the common areas of the property shared by the tenants and from which all tenants benefit.

This term can even be tailored to an "N" or "NN" type of leases, by defining it as "M" or "C.A.M" for maintenance or "I.M." for insurance and maintenance, respectively.

There is a lot of semantics in the different definitions we use in the day to day handling of our business; however I strongly believe that the clearer the definitions are presented the better to avoid any type of confusion when negotiating a lease which usually comprises a very important line in your expense operation. Leases can be very costly and expensive and you should always ask for professional advise, which most of the time is paid for by the Landlord and not by the Tenant.

JM Padron, CCIM

Commercial BPO's are getting more popular nowadays. Owners and Banks are in need to have a good idea of the value of their properties on the spot. I have prepared several for owners and financial institutions and I would like to share the Table of Contents any BPO's must have:

The summary should be the short description of the price opinion of the study performed with the magic number in bold.

You should also write an introduction or background of the company/broker performing the BPO.

The subject property must be described in detail, indicating all the relevant features about the property such as type of structure, roof, parking type, number of parking spaces, leasable area, gross building area, lot area, landscaping, etc. also this section must include at least one good picture of the property.

You should also present the demographics including the Retail/office snap shot.

Before performing the BPO analysis itself you must present the leasing activity and the sales comparables in the area which should be defined between 5 and 10 miles depending on the demographics.

Puting it all together: Once you have all of the above you just have to crunch the numbers and do a CAP approach and a sales comparable approach and come out with a range of value.

It is important to prepare maps and good pictures of the property and surroundings.

I hope this would be of some help for my fellow colleagues.

Thanks,

JM Padron, CCIM

BPO Table of Contents

1. SUMMARY

2. INTRODUCTION

3. SUBJECT PROPERTY

4. DEMOGRAPHICS

5. LEASING ACTIVITY

6. COMPARABLES

7. BROKER PRICE OPINION

EXHIBIT "A" Demographics

EXHIBIT "B" Leasing Activity

EXHIBIT "C" Leasing Adjustments

EXHIBIT "D" Comparables

EXHIBIT "E" Pictures and Maps