The Net Lease Transaction, Rent and Terms

Q. How flexible can you be in structuring a transaction that can meet my company’s needs?

A. CRIC Capital has the capital and experience to provide great flexibility in structuring transactions to meet your company’s needs. CRIC Capital combines the pioneering net leasing professionals of Boston-based Corporate Realty Investment Company L.L.C, with Prudential Real Estate Investors, the real estate investment and advisory business of Prudential Financial.

Q. How is the rent determined under the CRIC Capital net lease?

A. The net rent during the basic term of the lease will be based upon three primary factors:

· The financial condition of the Lessee
· The value of the real estate
· The term and structure of the transaction

This rent, together with the estimated residual value of the property, will be in an amount to repay CRIC Capital’s investment in the property, plus a base return, over the basic term of the Lease.

Q. How long is the basic term of a net lease transaction?

A. The basic net lease term is usually anywhere between 10 and 25 years. The basic lease term cannot exceed 75% of the economic useful life of the property without precluding operating lease treatment of the lease.

Q. Are the rents fixed for the full term of the lease?

A. The rents can be fixed for the entire basic term of the lease or structured with periodic resets of the basic rent (for example, after five or ten years), at the Lessee’s option.

Q. Can the fixed rents be stepped?

A. Yes, the fixed rents can be stepped, with lower lease payments in the early years and gradually increasing over the lease term.

Q. Are there any other rent structures available under the CRIC Capital net lease program?

A. CRIC Capital also offers a floating rate structure under which the rent can float with LIBOR or other appropriate indices for an initial period (e.g. the first 5 years) of the lease term. At any time during the 5-year period (but not later than the 5th year), the Lessee can elect to fix the rent for the balance of the lease term.