This glossary describes the terminology used throughout the proposal form and is a good place to get started learning more about entering Deal Terms in VTS.
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Base Rent (Headline Rent)
Per unit rent paid over the configured amount of months
Building Improvements (BI)
The amount allocated by landlord to improve the space or building for the tenant
Total cash being paid out as part of costs associated with lease TI + BI + Other Fees + Commissions
Commission Period (Commission Scales)
When commission percentage will be applied at a different rate during the term of the lease, the user can specify the start month that the percentage is applicable for. The percentage is applied between the start month and the next commission period start month.
Commissions Value paid to Landlord and Tenant brokers on the deal, can be calculated on a $/sf, Net %, Gross %, or # of Months or entered as a total Total = Commissions Amount for Landlord Rep + Commissions Amount for Tenant Rep
Commissions - Gross
When commission is calculated as a percentage, commissionable rent includes recovery rent from expenses (See Commission Calculation article for more information)
Commissions - Net
When commission is calculated as a percentage, commissionable rent does not include recovery rent from expenses (See Commission Calculation article for more information)
Total value of costs incurred by the landlord to incentivize the tenant
Calculation: Free Rent + TI + BI + Other Fees + Commissions
Deal Type Defines tenant's relationship to the space (i.e. New, Renewal, Extension)
Increase applied to the base rent price at configured intervals over the length of the lease
Value of expenses that will be paid out by the landlord
Calculation: Expense (1) $/sf + Expense (2) $/sf ... + Expense (n) $/sf
Terms are the final round of negotiations and have been agreed upon by both parties, usually used on terms that are in a signed LOI
Rent Free Months of zero or partial rent during the term of the lease
Free Rent - Gross
The tenant is not responsible for paying their share of expenses during the free rent period. Even if the expenses are net, the tenant is not charged for expenses during this time.
Calculation: Free Rent = (total rent during free rent duration) * % Free + recovery income
Free Rent - Net
The tenant is responsible for paying their share of expenses during the free rent period.
Calculation: Free Rent = (total rent during free rent duration) * % Free
Value of revenue from base rent, escalation, & recovery income
Calculation: Yearly value of First Base Rent + Opex Recovery / size
For Retail, how much rent the tenant has to pay vs sales they generate. The lower the rate the more able they are to afford their lease.
Calculation: Year 1 Base Rent / Annual Sales (Year 1)
The total value of incoming payments to landlord over the term of the lease
Calculation: (Base Rent + Escalations - Free Rent) + Recoveries + Other Income + Percentage Rent
Internal Rate of Return (IRR)
The return on money spent for the term of the lease
Calculation: IRR(NCF (month 1)... + NCF (month n), 0.1) * 12
Free-text entered by the user to distinguish proposals
Terms were proposed by Landlord or broker representing the landlord
Lease Commencement Date (LCD)
Start of the lease, defined in the lease document. Usually designates when the tenant is entitled to the space.
Lease Execution Date (LED, Lease Completion Date)
Date lease was or will be executed by lawyers
Lease Expiration Date (LXD)
VTS calculated expiration date Commencement date + term length
Lease Info Guarantor, Tenant Notice Info, Lease Drafter, Certificate of Insurance, or Other non-economic details included in a lease document
Lease rent and recovery structure label **has no effect on calculation**
Lease Type - Full Service Gross
Tenant pays a gross rent amount to the landlord, the gross rent includes anything the landlord will recover on expenses, the tenant does not pay part or whole expense amounts. This field does not affect the calculation of expense and recovery amounts, it is only a label, see 'Recovery Type' for calculations
Lease Type - Modified Gross
Tenant pays some portion of expenses back to the landlord in addition to gross rent, usually, tenant pays their share of expenses above a set amount. This field does not affect the calculation of expense and recovery amounts, it is only a label, see 'Recovery Type' for calculations
Net Cash Flow (NCF)
Net cash incoming over the length of the lease:
Calculation: Base Rent + Escalations - Free Rent + Recoveries + Other Income + Percentage Rent - Ti - BI - Commission - Other Fees - Expenses - Remaining Lease Obligation
Net Effective Rent NER
The normalized value a tenant will pay per period to the landlord over the length of a lease considering Net Present Value
Calculation: PMT(Discount Rate/12,Term(mo), NPV, Future value(0), 1 (beginning of month payments))
Net Effective Rent vs. Budget (NER vs. Budget)
Net Effective Rent as a percent of NER of budget
Calculation: NER/sf/yr / NER/sf/yr (of budget)
Net Effective Rent vs. Last Offer (NER vs. Last Offer)
Net Effective Rent as a percent of NER of the previous proposal entered
Calculation: NER/sf/yr / NER/sf/yr (of last offer)
Net Effective Rent without Building Improvements (NER w/o BI)
The normalized value a tenant will pay per period to the landlord over the length of a lease considering Net Present Value where the NPV does not include BI costs
Calculation: PMT(Discount Rate/12,Term(mo), NPV-BI, Future value(0), 1 (beginning of month payments))
Net Present Value (NPV)
The present value of the net cash flow given the time value of money
Calculation: NPV(Discount Rate/12, NCF (month 2)...+NCF (month n)) + NCF (month 1)
Value of revenue from base rent, escalation, - recovery income
Calculation: Yearly value of First Base Rent + Opex Recovery + (Opex Expense) / size
Options & Rights for the tenant or landlord listed as clauses in the lease document
Types Category of Option/Right
Fees landlord will pay as part of concessions, total or per area
Per unit amount paid to landlord over a duration of the lease term, can be specified as 'Parking', 'Storage', or 'Other'.
The number of months it takes for the landlord to earn back what they had to pay out as costs of the deal.
Calculation: Number of the month where cashflow becomes positive.
Percentage Rent (Turnover Rent)
Rental income based on retail sales paid to the landlord in addition to Base Rent & Escalations. This is negotiated to be paid only after some minimal value of sales is hit.
"Natural Breakpoint = Total Base Rent / Overage Percentage
Percentage rent/mo = (Percentage * Monthly Retail Sales)
Monthly Retail Sales = (Annual Retail Sales * Annual Sales Growth) /12"
Proposal Date (Date Entered)
Date controlled by users that represents when the proposal was entered, sent, or received. Automatically defaults to the current date.
Free text field for the user to add notes
Designates which party the terms were proposed by OR if the proposal is one of many options or is the final agreed upon terms
Value of expenses that will be paid to landlord by the tenant
Calculation: Expense (1) Recovery $/sf + Expense (2) Recovery $/sf ... + Expense (n) Recovery $/sf
Recovery Method - Amount
When calculating recovery on an expense, assume the user defined amount is recovered
Calculation: Recovery = Recovery Amount $/sf/yr
Recovery Method - Gross
When calculating recovery on an expense, assume no amount is recovered
Calculation: Recovery = $0/sf/yr
Recovery Method - Net
When calculating recovery on an expense, assume the entire amount is recovered
Calculation: Recovery = Expense $/sf/yr
Remaining Lease Obligation (RLO)
Per unit value of a Tenant's previous lease with the same landlord. Landlords use this to offset the rental income from the renewal with the rent from the previous lease that they will no longer receive from the tenant.
Terms are a version of the deal that was proposed with more than 1 scenario, this is usually when someone proposes terms for longer and shorter terms (i.e. 5 and 7-year version of the proposal)
Total area for which the income and costs of the term apply. Correlates with the physical measurement of the space.
Space or spaces for which the income and costs of the term apply (synonymous with: suite & unit)
Tenant Improvements (TI)
Capital Contributions Amount paid to the tenant to improve the space
Terms were proposed by tenant or broker representing the tenant
Tenant Risk Type, Amount, and Description of Money paid to landlord outside of lease cash flow to mitigate the risk of leasing to tenant
Duration of the lease in months
Amount of income that will be realized as "rent" Total value of Base Rent + Escalations - Free Rent
Tenant pays their share of expenses back to the landlord in full.
This field does not affect the calculation of expense and recovery amounts, it is only a label, see 'Recovery Type' for calculations