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.

**Jump to a section:**

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

# A

# B

**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

# C

**Capital**

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**

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)

**Concessions**

Total value of costs incurred by the landlord to incentivize the tenant

*Calculation: Free Rent + TI + BI + Other Fees + Commissions*

# D

**Deal Type**

Deal Type Defines tenant's relationship to the space (i.e. New, Renewal, Extension)

# E

**Escalations (Esca)**

Increase applied to the base rent price at configured intervals over the length of the lease

**Expenses**

Value of expenses that will be paid out by the landlord

*Calculation: Expense (1) $/*sf* + Expense (2) $/*sf* ... + Expense (n) $/*sf

# F

**Final Proposal**

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

**Free Rent**

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*

# G

**Gross Rent**

Value of revenue from base rent, escalation, & recovery income

*Calculation: Yearly value of First Base Rent + Opex *Recovery / size

# H

**Health Ratio**

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)*

# I

**Income**

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*

# J

# K

# L

**Label**

Free-text entered by the user to distinguish proposals

**Landlord Proposal**

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**

Lease Info Guarantor, Tenant Notice Info, Lease Drafter, Certificate of Insurance, or Other non-economic details included in a lease document

**Lease Type**

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

# M

# N

**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)*

**Net Rent**

Value of revenue from base rent, escalation, - recovery income

*Calculation: Yearly value of First Base Rent + Opex Recovery + (Opex Expense) / size*

# O

**Options/Rights**

Options & Rights for the tenant or landlord listed as clauses in the lease document

**(Options/Rights) Types **

Types Category of Option/Right

**Other Fees **

Fees landlord will pay as part of concessions, total or per area

**Other Income **

Per unit amount paid to landlord over a duration of the lease term, can be specified as 'Parking', 'Storage', or 'Other'.

# P

**Payback**

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.

**Proposal Notes**

Free text field for the user to add notes

**Proposal Type**

Designates which party the terms were proposed by OR if the proposal is one of many options or is the final agreed upon terms

# Q

# R

**Recoveries**

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.

# S

**Scenario**

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)

**Size **

Total area for which the income and costs of the term apply. Correlates with the physical measurement of the space.

**Spaces **

Space or spaces for which the income and costs of the term apply (synonymous with: suite & unit)

# T

**Tenant Improvements (TI)**

Capital Contributions Amount paid to the tenant to improve the space

**Tenant Proposal**

Terms were proposed by tenant or broker representing the tenant

**Tenant Risk**

Tenant Risk Type, Amount, and Description of Money paid to landlord outside of lease cash flow to mitigate the risk of leasing to tenant

**Term **

Duration of the lease in months

**Total Rent**

Amount of income that will be realized as "rent" Total value of Base Rent + Escalations - Free Rent

**Triple Net**

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*

# U

# V

# W

# X

# Y

# Z

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