Base Year Stop

Upon lease commencement, the building owner will agree to pay the tenant’s first year expenses (a.k.a. base year expenses) and will continue to pay the same amount in each of the subsequent years while the tenant will pay any additional costs above the amount realized in the base year. So, in a base year stop scenario, the building owner’s costs for op ex is capped to the amount the he or she had to pay in year 1. So, if year 1 expenses were $1k, and year 2 expenses were $1.5k, then the landlord would still pay $1k in year 2 and the tenants would pay $500 difference.