Stimulation 2 Flashcards

Stimulation 2 Flashcards Issues to identify that may require clauses for Office properties

• zoning- Financing (can buyer afford)- energy efficiency-

parking- Building condition- telecommunication systems- Building permit (previous permits closed)- Environmental (lending companies require)- service contracts- Leases- Financials- legal advice Soft costNot considered direct construction cost but include everything from architectural and engineering fees, legal fees, permits, taxes, insurance, etc Variables that impact the sale of a business REBBA requirements - they have specific requirements for the sale of a business. Requires a profit and loss statement for the proceeding 12 months or since the business was acquired and a statement of assets and liabilities. If neither of these are provided a " sale of business - statement under oath" must be completed and signed by the seller, waiver portion signed by the buyer.Leases - provide all the leases for the property and any equipmentFinancial statements - REEBA requires that financial statements of the business for the last 12 months should be provided, however, it would be good to have them for the last three years.Hard costPhysical components of the buildings, structural, mechanical, electrical, site preparation, landscaping, evacuation basically anything tangible Commercial leases (additional rent)Composed of recoverable items, expenses related to maintaining property Issues that may require inclusion of clauses for industrial properties

• building permit- ESA- Building inspection report- legal

review- warranty clause for equipment- Zoning- parking- service contracts- Financing Commercial leases (gross lease)Tenant pays fixed rent, landlord pays all expenses Gathering and verifying information for a retail property- competition- Range- Clustering- threshold- traffic counts- transit- new development

• types of industrial properties- General purpose- special purpose- single purpose

Length of the lease does what?Provides stability for a tenant W steps for writing a clauseWho is to do it?Who is to pay for it ?What is to be done?Within what time limit?What is to happen in the event it doesn'tCan it be waived?What is typical when a rent-free period occurs - typically at beginning of the lease- Tenant is not paying the base rent, but paying TMI- understanding if it is a gross rent free or net rent free- ex. Five year lease (2-3 months rent free)

Commercial leases (retail ground lease)Land lease or pad lease, rent of land only Main difference between the agreement of purchasing sale for commercial vs residential

• HST ( taxes automatically included in purchase price,

excise tax act (ETA) exemption)(most commercial property transactions are subject to HST if the sale is not subject to HST then seller agrees to clarify on or before the closing.)- Signature section has an area for corporation or business name- Net leasesSingle - tenant pays base rent + any one additionalDouble - tenant pays base rent + any two additionalTriple - tenant pays base rent plus all TMI(if any expenses increase it's the tenants responsibility if the tenant was paying for them to begin with) Gathering information for an industrial property (G.E,R.M + E)

• ESA- zoning- Truck access- loading docks- proximity to

highway airport railways waterways- parking How does an ESA affect the value of an industrial property transaction?ValueUseTimelineFinancing Identifying clauses for the agreement of purchasing sale for an industrial property

• zoning- Financing- parking- building report- Environmental

site assessment- review of service contracts- lawyers review( a custom clause if required) How is the option to renew a lease beneficial? what is typical? What is right to arbitration?

• gives the tenant the option to renew at the end of the

lease- typically the sales person adds the clause- Types of Conditionscondition precedent (something must be done in order to make the agreement binding)condition subsequent (the agreement is automatically binding unless something is done)True condition precedent (cannot be waived or fulfilled)(sometimes you have to add a line with the seller allowing access to the buyer for inspections) thresholdDetermining the demographic of population and economic considerations Different type of Retail propertyShopping centres:- neighbourhood shopping centre/strip mall- community shopping centre- regional shopping centres- super regional shopping centreRetail Structures- lifestyle centres- outlet centre/mall- big box- power centre- Main Street retail- freestand single use- regional power centre Gathering information for a office properties - Type of ownership (ex. Corporation)- Egress and ingress- Budget- Long term or short term- Zoning- Survey- Potential for improvement- parking- visibility Who owns leasehold improvements?Landlord What happens to the least hold improvements upon lease expiry?Stays with the property and is a benefit to the landlord identify clauses for the agreement of purchase and sale for retail properties

• zoning- financing- building condition reports- reviewing

financial statements-building permit- reviewing leases-reviewing service contracts (ex. Snow removal.)-lawyers review- Environmental site assessment-

warranty for equipment(depending on if there is any specific requests custom condition) IRV Formula (Capitalization Rate Formula) A simple calculation for finding the net operating income (I), the capitalization rate (R), or the value (V) of an investment

property. When any two factors are known, the third can be determined.IR x V