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Abatement: The reduction or elimination of a continuing charge (including Base Rent, expense recoveries, percentage rent and/or any other cash consideration) required to be paid by a tenant under a lease for a specified period of time.

EXAMPLE: To induce ABC Tenant to execute their lease, the Landlord provided an abatement equal to 50% of the Base Rental payments for the initial 3 months of the 5 year lease term. During these 3 months, the monthly Base Rental payment per the Lease was $2,000. Because of the abatement, ABC Company is only required to pay $1,000.

Ad Valorem Taxes: Taxes which are assessed "according to value", such as property taxes.

Additional Rent: Any financial obligation of tenant payable to the landlord other than Base Rent. Additional Rent may include, among others, items such as expense recoveries, utilities, percentage rent, CPI adjustments and late fees.

Add-On Factor: The percentage by which the useable square footage of a tenant's premises is increased to arrive at net rentable square footage. The add-on reflects an allocation of the square footage of common areas within the building.

EXAMPLE: ABC Tenant's lease indicates that the square footage of the premises is 1,000 useable square feet and 1,140 rentable square feet. The add-on factor applied to the premises is 14.0%.

All-Risk Insurance: Property insurance which covers losses occurring from fire, explosion and other perils. When obtained by the landlord, the property being insured is the building itself. When obtained by the tenant, the property being insured is typically leasehold improvements and personal property of the tenant. The coverage amount is often stated as a percentage of replacement cost or replacement value. See also 'Property Insurance'.

EXAMPLE: ABC Tenant's lease requires them to obtain All-Risk Insurance equal to 100% of full replacement cost for all personal property and improvements paid for by Tenant upon the premises. A fire destroys a portion of ABC Tenant's premises, and many computers and items of furniture are lost. The All-Risk Insurance will reimburse ABC Tenant for the replacement cost of the computers and furniture.

Amendment: A legal document executed by a landlord and tenant which changes the terms or provisions of a previously executed document. Amendments are often sequentially numbered based upon the order in which they were executed (i.e., First Amendment, Second Amendment, etc.).

Amortization: The allocation of the cost of an item over its estimated useful life or the payment of an indebtedness by periodic installments.

EXAMPLE: ABC Tenant's lease gives the Landlord the right to include in recoverable operating expenses, capital expenditures as required by law, as amortized over the useful life of such expenditure on a straight line basis. The Landlord incurs a cost of $250,000 for a capital expenditure required by law, which expenditure is determined to have a useful life of 10 years. The Landlord may include in recoverable operating expenses $25,000 per year, representing the annual amortization of the capital expenditure.

Anchor Tenant: The primary tenant in a shopping center. Larger shopping centers may have more than one anchor tenant. Rent for anchor tenants is often significantly lower than for other tenants in a shopping center because they are the tenants who draw consumers to the center.

Assignment: The transfer of one's property, interest or rights to another. The party making the transfer is the Assignor and the party to whom the transfer has been made is the Assignee. In a lease assignment, the Assignor transfers some or all of their rights to use leased property to the Assignee for the unexpired remainder of the lease term. In most assignments, the Assignee acquires the same rights and privileges, and assumes the same obligations, which belonged to the Assignor. In addition, the Assignor typically remains liable for any lease obligations which are not fulfilled by the Assignee after the lease has been assigned, unless relieved of such obligations by the landlord. Assignments usually require landlord's consent.

EXAMPLE: ABC Tenant has been purchased by XYZ Company. The purchase agreement requires ABC to assign all of their leases to XYZ. In accordance with the terms of ABC Tenant's lease at Ellipsis Tower, ABC and XYZ enter into an Assignment and Assumption Agreement, whereby ABC agrees to assign their lease to XYZ, and XYZ assumes all of ABC's lease obligations for the unexpired term of the lease.

Assumption: The act of assuming the obligations of a tenant under a lease. An assumption is often associated with an assignment via an 'Assignment and Assumption Agreement', whereby the Assignor assigns their rights in a lease to the Assignee, and the Assignee assumes the obligations of the Assignor.

EXAMPLE: See example for Assignment.

Attornment: The formal agreement by a tenant to become the tenant of a new landlord, including the right of the new landlord to collect rent and enforce the provisions of leases. While attornment language is included in most leases, in some cases attornment provisions are tied in with subordination and non-disturbance provisions via a separate document called a 'Subordination, Non-Disturbance and Attornment Agreement'. Because attornment provisions provide protection to any new landlord, they are typically associated with mortgages or ground leases in the event of foreclosure or default.

EXAMPLE: ABC Tenant's lease at Ellipsis Tower contains an attornment clause whereby ABC agrees to attorn to a new Landlord in the event of foreclosure under a mortgage agreement. The Landlord of Ellipsis Tower defaults under their mortgage with Lender One, and Lender One forecloses on the mortgage. Because of the attornment provision, ABC agrees to recognize Lender One as the new Landlord under the lease.