Good question. Your business sense serves you well. Unfortunately for the tenant, unless it is clearly spelled out in the lease that their is some kind of cap increases tax and insurance (sometimes occurs with larger tenants, possibly anchor or co-anchor), then you are completely within your legal rights to incrase taxes and insurance with the pro-rata adjustment occuring as the costs are incurred (or shortly thereafter, upon an adjustment).
Certainly, when the economy is doing what it is and mom-and-pops, in particular, struggle to make their payments, the prospect of their rent increasing by $1-$3/SF because the RE taxes have been re-assessed due to the sale is not going to be popular or well received. Still, it happens all of the time, and if the tenant is in place and paying their bills, they will just have to strap on and play by the rules...increase and all. I am not suggesting that you don't get some fall out and that some tenants get tipped over the edge of having to consider other options (not paying, shutting down, abandment, etc.). Do you homework before buying. Make certain you are comfortable with the in-place tenants doing well in the center. If they are already struggling, start thinking about their replacement and at one base rent you can achieve.
Feb 4, 2013