The QLoop Gross-Up Calculator is provided only as a guide and represents QLoop's application of typical gross-up which have been used by the author in practice. It does not represent ALL possible ways of calculating a Gross-up adjustment. All calculations should be manually and independently verified by the user prior to use. QLoop, LLC bears no responsibility for misuse, inapplicability to actual lease agreements, misapplication, misinterpretation or other incorrect uses. The intent of the lease should determine the requirements selected. Please note that specific lease terms may be interpreted differently or intended by the parties to be applied differently than as used here.
QLoop Gross-Up Principle 1 - Fairness: When gross-up is permitted by the Lease, it should be applied fairly. Fairly means that (1) the Landlord does not collect more from the tenant than the amount actually paid (multiplied by the Gross-up threshold) by the landlord for the services to the Tenant's premises and (2) the Tenant does not pay less than it cost the Landlord fr the services to the Tenant's premises. As such, "market rates" which were not paid should not be used in the calculation of gross-ups as they may result in creating a profit which will go against the Fairness principle.
QLoop Gross-Up Principle 2 - No Gross-up of Fixed Costs: Expenses which do not fluctuate ratably and proportionally with changes in physical occupancy or tenancy (as may be agreed-upon by the parties), should not be categorized as fixed and not subject to Gross-up.
QLoop Gross-Up Principle 3 - Appropriateness of Threshold: The Gross-Up Threshold should be representative of historical occupancy precendence. A Property that has been consistently less than 100% occupied should not establish a 100% threshold for Gross-Up purposes.
QLoop Gross-Up Principle 4 - No Variable Charges to "Dark" Premises: A tenant with an active lease for an unoccupied ("dark") premises, or a premises which is not serviced by the Landlord for the service subject to Gross-up should not be charged the actual and grossed-up costs for the services because the landlord did not incur such costs. As such, the Landlord should ensure that only tenants who received the variable services are charged their pro-rata share of the grossed-up expenses.
Zero-Test: As Gross-up calculation methods are increasingly subjective, it may be beneficial to apply your Landlord's assumptions of Fixed versus Variable costs and calculation approach to obtain a zero "difference" in the Premises Allocation section of "Step 3: Results". If the Landlord's approach and calculation method is deemed reasonable and yield's no material differences in the "Premises Allocation" section of the Step 3: Results, the Tenant may consider accepting the Landlord's calculation.
QLoop Exhibit: A hypothetical version which illustrates the intent of the parties may be printed and inserted in the lease as an exhibit. The use of illustrative exhibits significantly reduce landlord and tenant disputes and conflicts in lease negotiations and audit resolutions.