Income Approach - Rent - Leasehold

Rents

Base rent

The minimum rent stipulated in a lease.

Contract rent

The actual rental income specified in a lease.

Effective rent

Total base rent, or minimum rent stipulated in a lease, over the specified lease term minus rent concessions; the rent that is effectively paid by a tenant net of financial concessions provided by a landlord.

Excess rent

The amount by which contract rent exceeds market rent at the time of the appraisal; created by a lease favorable to the landlord (lessor) and may reflect unusual management, unknowledgeable or unusually motivated parties, a lease execution in an earlier, stronger rental market, or an agreement of the parties.

Market rent

The most probable rent that a property should bring in a competitive and open market reflecting the conditions and restrictions of a specified lease agreement, including the rental adjustment and revaluation, permitted uses, use estrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (TIs).

Overage rent

The percentage rent paid over and above the guaranteed minimum rent or base rent; calculated as a percentage of sales in excess of a specified breakpoint sales volume.

Percentage rent

Rental income received in accordance with the terms of a percentage lease; typically derived from retail store and restaurant tenants and based on a certain percentage of their gross sales.

Leaseback

An arrangement in which the seller of a property is obligated to lease the property from the buyer under terms and conditions that are negotiated by the parties.

Leasehold improvements

Improvements or additions to a leased property that have been made by the lessee.

Leasehold estate at sufferance

The leasehold interest of a tenant who continues to occupy the premises the tenant originally leased, despite the termination of the lease, and without a renewal.

Leasehold estate at will

An interest in real estate which gives a tenant the right to occupy a property for an unspecified amount of time, usually at the mutual convenience of the tenant and the landlord.

Leasehold estate for years

A typical leasehold estate, which provides that a tenant has possession and use of property for a specified period of time at a contract rental. A lease does not usually end upon the death of either the lessee or the landlord, but is inheritable by their heirs.

Leasehold purchase agreement

A lease agreement whereby a tenant can acquire ownership of a property through a series of specified payments. At the end of the lease term, title is transferred to the tenant.

Interpolation

The calculation or estimation of a quantity within the range of data on which

Extrapolation

Calculating or estimating a quantity outside of the range of the data on which the calculation or estimate is based; projections that presume a continuation of observed trends, patterns, tendencies, or relationships.

Siting factor

In urban planning, the origin of settlement in a city, which generally influences subsequent land use and growth patterns.