1. Property Management Chapter 12

2. Property Management and L easing Objective of a Property Manager –To secure for the owner the highest net return over the useful life of the property

3. Property Management and L easing Functions of a Property Manager –Administrative management Rent Collection Bookkeeping (P&L reports) –Marketing Marketing strategy (design vs. location) Tenant selection (complementary mix) Rent schedule (market rent study) –Physical management (maint. V. renov.)

4. Property Management and L easing The Management Agreement –Powers of the Manager Set Rent Execute leases Collect Rent Spend Money on Maintenance Manage Maintenance and Mgt. Personnel –Compensation % of Gross Revenue (3-6% typical) Leasing Commissions (1-5% of lease amt. Cashed out)

5. Property Management and L easing Role and Function of Asset Managers –Management (Corporate Strategy) –Acquisition (Site Selection) –Financing (buy, Sale-leaseback, rent?) –Disposition (sell, exchange, renov?)

6. Property Management and L easing Classifications of Leases –Duration of term Tenancy for stated period-conveys the property to the tenant for a stated period of time Tenancy from period to period-indefinite duration (notice given) Tenancy at will-may be terminated by either party at any time Tenancy at sufferance-provides the least protection

7. Property Management and L easing Methods of Expense Payment –Gross lease-landlord pays real estate taxes, utilities, insurance and all operating expenses –Net lease-tenant pays the operating expenses (Shifts inflation risk) – usually variable expenses –Modified Net (net-net) Tenant pays some mix of fixed and variable expenses –Triple Net (net-net-net) Tenant pays all expenses to the property (Absolute Net)

8. Property Management and L easing Methods of Rent Payment –Fixed-rent lease-rent is fixed for the term of the lease –Graduated-rent lease (Step Lease)-rent is increased by percentage at graduated intervals –Reappraisal lease-the level of each rent increase is determined by reappraisal of the property –Percentage lease (Overage)-rent is based on some percentage of sales made on the premises –Index lease (CPI index, Porter’s wage index)