What is Letter of Intent (LOI)?
A non-binding document outlining proposed lease terms including rent, CAM structure, and expense obligations before a formal lease is drafted.
Definition
A letter of intent (LOI) is a preliminary, typically non-binding document that outlines the proposed terms of a commercial lease before a formal lease agreement is drafted. The LOI specifies key economic terms including base rent, lease term, tenant improvement allowance, and the CAM/expense structure (NNN, modified gross, or gross with expense stop). From a CAM perspective, the LOI stage is where critical expense terms are first negotiated — including cap provisions, exclusion lists, admin fee percentages, and audit rights. Property controllers and asset managers should review LOIs before execution to ensure the proposed CAM terms are operationally feasible and will not create billing complexity that undermines recovery ratios.
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