MDNews - San Antonio

October 2011

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base year amount ($10 x 5% = 50 cents increase). Therefore, $26 is the all-in starting rate for Big Apple MOB. In the Red Apple triple-net lease, the tenant pays a $16 base rate. Because a triple-net lease also requires the tenant to pay 100% of the tenant's pro rata share of operating expenses, an additional $10 per RSF per year for operating expenses is added to the base rate for a total of $26 per RSF. This makes the Red Apple lease effectively the same rate as the Big Apple lease during the first year of the lease term. There are hybrids of the lease struc- tures noted above that vary by project type. If you are considering lease space in a garden building or a retail center, for example, expenses are treated dif- ferently. When comparing these types of projects to a multitenant MOB, operating expenses may appear lower. They are often slightly lower because they do not include elevators, on-site maintenance and management, and other amenities that may contribute to operating costs in an MOB. Regardless, one must also make sure to include all separate costs paid directly by the tenant. Are utilities separately metered? Who is responsible for janitorial services? Who replaces the air filters and pays for the air-conditioning when it breaks? Are there other fees (i.e. condo fees) associated with the project? How are other operating expenses treated? Are they treated like triple-net expenses, base year expenses or a combination of both? Once out-of-pocket costs and total expenses are determined, how do they compare per RSF? Always make sure you are comparing apples to apples. An awareness and understanding of the components affect- ing your out-of-pocket lease costs may help you avoid picking the bushel with the "sour apple" you hadn't budgeted for and, hopefully, inspire you to ask the right questions when you need to make a true comparison of costs associated with your lease. Regardless of where your office might be located or what kind of lease you may have, there is no doubt you will always be the "apple of my eye" when it comes to the diagnosis, treatment and care of patients and their families. Elize Pruske, CCIM, is Vice President of Leasing and Development at Cambridge Healthcare Proper t ies. Cambr idge Healthcare Properties is a Texas-based real estate firm specializing exclusively in the nationwide development, acqui- sition, ownership and management of highly integrated, state-of-the-art medical facilities. n MDNEWS.COM MD NEWS San Antonio | 17

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