Your Base Year Is Grossed Up to 95% and Then Carved Back Down
Four executed office leases filed with the SEC all gross up the base year for operating expenses, and no two do it the same way. Life360's lease at 539 Bryant Street grosses the base year up to 95% occupancy and then, in the next three sentences, strips amortized capital costs and market-wide extraordinary increases out of that same base year and puts a floor under utility, service and insurance costs in every later year. Alarm.com's Ninth Amendment, signed 12 March 2020, grosses up base year expenses to 95% and leaves base year taxes at actual. Spaceflight's Herndon lease grosses up to 100% and adds that base year management fees are grossed up as if the building were fully leased with full rents regardless of rental abatements. Tufin's lease at 2 Oliver Street grosses up both years identically and then closes the base year audit window 60 days after the base year ends, before any reconciliation statement arrives. The only reported fight is about the denominator: a Dallas law firm claimed $419,007 and $104,601 in overcharges because its landlord ran the occupancy calculation on 285,111 square feet instead of the 280,432 stipulated in the lease, and the court held that a disclosed overcharge is a breach of lease, not fraud.