Contract Rent
The rent actually specified in a lease, as opposed to market rent — what the space would command today. The gap between them drives leased fee and leasehold value.
Related Terms
Market Rent
The rental income a property would most likely command on the open market, based on analysis of comparable rental properties in the area.
Leased Fee Interest
The landlord's interest in a leased property: the right to receive contract rent during the lease term plus the reversion of the property when the lease ends.
Leasehold Interest
The tenant's interest in a leased property — the right to occupy and use it for the lease term.
More in Income Approach
View allCapitalization Rate (Cap Rate)
Cap RateThe ratio of a property's net operating income to its market value or sale price, expressed as a percentage.
Gross Rent Multiplier (GRM)
GRMThe ratio of a property's sale price to its gross monthly (or annual) rental income.
Net Operating Income (NOI)
NOIThe annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.
Effective Gross Income (EGI)
EGIPotential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).