how to handle management fees based on revenue of property when largest tenant has a rent abatement?

Tenant is 70% of the bldg. and had a new lease resetting the Base Year to 2013. However in 2013 their rent was abated for 11 months causing the Mgmt Fee Calc of 4% to be extremely low. There is no Management Agreement as it is done in-house. What is the "industry norm" on this situation. thanks!
In Property Management - Asked by Anne R. - Oct 27, 2015
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Answer(s)

Paul C.
Broker/Agent
Rancho Palos Verdes, CA

Management fee would be paid on amount of rent that should have been collected. Property manager should not take the hit on rent abatement, as they still need to manage the property.

Nov 11, 2015
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Chris S.
Broker/Agent
Coeur D'alene, ID

Most management contracts will include a minimum monthly charge. In this instance, I would make sure that fee covers your routine monthly expenses associated with the management of the building.

Mar 16, 2017
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