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Glossary of Shopping Center Terms

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A standard fire policy is called a ____ _________ policy; it is often written with an __________ coverage endorsement and a ______________ and ____________ endorsement?
Fire insurance is often written with an extended coverage endorsement and a vandalism and malicious mischief endorsement
The sole negligence agreement (a type of hold-harmless agreement) flowing from the tenant (party A) to the landlord (party B) does what three things?
(1) Relieves LL or responsibility for tenant's personal property, regardless of "fault". (2) Avoids duplication of insurance coverages (3) Clearly places responsibility for protecting the tenants' property on the tenants.
A deduction of specific expenses or investments from all or a portion of percentage rent.
Offset
A transfer of use or occupancy rights for a given period of time.
Lease
Rent that is based on a percentage of a tenant's sales. This is usually paid in addition to a minimum or base rent.
Percentage rent
Money that is advanced to the tenant by the property owner to allow the tenant to finish construction on the tenant's leased space. Also known as a tenant allowance.
Tenant investment (TI)
A negotiated sales volume for the payment of percentage rent other than dividing the minimum rent by the percentage rent rate. Name both variations.
Artificial breakpoint or negotiated breakpoint
What is CPI-U
CPI-U is the consumer price index for all consumers and covers 80% of the population.
A person employed by the owner of a particular shopping center or centers to lease space to tenants on terms acceptable to owner.
Leasing agent
Parcels of land contiguous to a shopping center. Created by the owner of the shopping center and usually sold for reimbursement of equity.
Outparcels
The determination of the total income needed to finance and build a shopping center. This is a document.
Pro forma
A fixed amount of rent paid by a tenant to the property owner that is not directly based on the tenant's sales. This is also known as minimum rent.
Base rent
To pay for or write off an expense over a fixed period.
Amortize
The obligatory content of a lease agreement. A weak ______ gives little recourse should the other party fail to honor the terms of the _______: a strong _______ provides better recourse in the event of defaults.
Covenant
A failure to honor the terms of a lease agreement. Nonpayment of rent, for example, is a _________.
Default
Proper examination of necessary information, to satisfy oneself as to its accuracy.
Due diligence
The leasing representative's responsibility to use information conscientiously when dealing with tenants.
Duty of care
A letter signed by tenants certifying the dates of the beginning and end of their leases, and certifying that there are no liens on their properties.
Estoppel certificate
Charges shared among tenants for the property owner's maintenance and operation of the common areas.
Common area maintenance charges (CAM)
A letter from the tenant to the property owner setting out the basic financial terms along with any contingencies.
Lease request
A trust established by a group of investor's that owns a piece of real estate such as a shopping center.
Real estate investment trust (REIT)
Synonym with Tenant Investment (TI) and Tenant Allowance (TA).
Construction allowance
A center whose tenants are not doing well in terms of sales volume and one which is suffering a serious vacancy problem.
Delicate center
A letter which outlines the business terms of a proposed lease, which is signed by both landlord and tenant prior to the execution of a lease document.
Letter of intent (LOI)
A lease stipulation in which management states that only one store of a certain type (a bookstore, for example) will be permitted in the center.
Exclusives or exclusive use clause
A order by a court, which may be either mandatory (requiring tenant or landlord to comply with a certain course of action) or prohibitory (forbidding a certain course of action.
Injunction
A clause in some leases giving the tenant the right, if certain conditions are not met by a certain time, to walk away from the lease or giving the landlord the right to terminate the tenant's lease.
Kick out
An independent commitment by a third party (such as a bank) to honor obligations agreed upon by the landlord and tenant under certain conditions.
Letter of credit
A letter of credit whose total commitment is reduced upon fulfillment of certain conditions.
Reducing letter of credit
A proportionate share of payments
Pro rata
Reduction in amount, usually of rents or other payments due under the lease.
Abatement
Provision whereby a lender or landlord may declare the entire unpaid amount due and payable upon an event such as default.
Acceleration clause
Declaration by a person who has signed a document that the execution of the document is a voluntary act, made before a duly authorized person.
Acknowledgment
Gradual paying off of a debt by periodic installments, generally in equal payments at regular intervals over a specific period of time.
Amortization
Something that is outside of the property itself, but is considered to be a part of the property and adds to its greater use or enjoyment, such as an easement or right of way.
Appurtenance
Method by which a right or contract is transferred from one person to another.
Assignment
Witnessing of the execution of a document by observation and signature.
Attest
Tenant's formal agreement to be the tenant of a landlord.
Attornment
Minimum rental due under a lease that has a percentage or overage rental provision.
Base rent
Financial process whereby the anticipated future income is converted into a single lump sum value.
Capitalization
Personal property.
Chattel
Clause or provision of an insurance policy that states that a minimum percentage of the value of the property being insured be insured in order to collect the full amount of the loss, even if that loss is less than the insured value.
Coinsurance
Area of property that is or may be used by all of the owners or tenants of the property.
Common area
The body of law that has grown out of the legal customs, practices, and court decisions. This primarily relates to English law in absence of statutes or precedents.
Common law
An agreement that the law will enforce. The essential elements of a _______ are mutual assent (offer and acceptance), consideration, competent parties, legal subject matter, it must meet the requirements of the Statute of Frauds.
Contract
Promises written into agreements whereby a party agrees to the performance or nonperformance of certain acts, or which may require or prevent certain uses of the property.
Covenants
Amount of money recoverable by a person who has been injured in any manner through the act, failure to act or default of another.
Damages
Failure to fulfill an obligation or promise, or to perform certain specified acts.
Default
Right, privilege, or interest that one party has in the land of another.
Easement
Right of a governmental body to acquire privately held real property for public use by use of condemnation. The owner must receive fair and equitable compensation for the taking.
Eminent domain
Unauthorized physical intrusion of a fixture or real property improvement onto the property of another.
Encroachment
Any claim, lien, charge or liability which affects or limits the fee simple title to real property.
Encumbrance
Legal form under which property is owned or operated.
Entity
Interest or value that the owner has in real property over and above the liens against it.
Equity
Doctrine of law that stops one from later denying facts that the person once acknowledged were true and that others accepted upon good faith.
Estoppel
Provision of a lease which allows a party the right to not be held personally liable for damages. Usually limits the tenant's right of recovery to the equity that the landlord has in the property.
Exculpatory clause
Absolute ownership of real property.
Fee simple
Improvements or personal property attached to the land so as to become part of the real property.
Fixtures
Generally, a non-binding document submitted prior to a formal lease that delineates the intentions of both the property owner and the tenant.
Letter of intent
Total tenant sales from all transactions.
Gross sales
A fixed amount of rent that is not based on a tenant's sales. This is also known as base rent, after a tenant's sales have reached a certain level.
Minimum rent
The name under which a tenant operates a business.
Trade name
The variables that contribute to determining rent for a space are C.L.A.S.S.; they are:
Category, Location, Amount (of frontage), Allowance, Size, and Situation (owner's).
Periodic increase of minimum rent which when averaged provides the owner with an average rent over the term.
Graduated rent
Guaranteed annual rent a tenant must pay during the term of the lease.
Minimum rent
Total rent is a product of:
Land costs, Building costs, Soft costs (legal, engineering, environment, etc.), and return to owner.
Synonym for Tenant allowance and Tenant investment. It is a type of allowance.
Construction allowance
FF&E is the acronym for:
Furniture, fixtures, and equipment
The major up-front costs paid by the property owner. The majority of these costs are the physical costs of acquiring a property and of doing construction work on the site.
Hard costs
Synonym for base rent
Minimum rent
Costs that the owner cannot pass through to the tenants, such as special legal fees or some types of marketing expenses.
Non-reimbursable owner costs
Improvements made by the property owner on the shopping center site.
On-site improvements
The tenant's portion of a shopping center's expenses. This portion is composed of common area maintenance, taxes, insurance, and any other expenses that the property owner and the tenant have agreed will be paid by the tenant.
Pass-through expenses
Leasing a project to tenants before construction has begun.
Preleasing
A measure of annual return that shows what percentage return the property owner is receiving on the project. How is it calculated?
Return on investment is calculated by dividing the net operating income by the project investment.
Money advance to the tenant by the property owner to allow the tenant to finish construction on its leased space. Also known as Construction allowance and Tenant Investment.
Tenant allowance
The amount a property is worth -- ie the amount it will sell for. How is this determined?
Project value or Value of project is determined by dividing the property's net operating income by the capitalization rate (CAP rate).
The mutually beneficial effect created when two stores complement each other in terms of engendering sales and shopper traffic in the mall.
Cross-pollination
Information pertaining to population characteristics such as age, income, and family size.
Demographics
Renting space to a tenant who will pay rent and open for business in the shopping center.
Leasing
The proportion - usually expressed as a percentage - of total sales in a center that falls into a particular category.
Sales capture rate
An unavoidable cause of a delay in, or of the failure of, the performance of a contractual obligation on a timely basis.
Force majeure
Total floor area of a building.
Gross area
Total floor area of a building available for lease. It excludes common areas and certain areas not offered for lease to a specific party.
Gross leasable area
A lease of property whereby the landlord is responsible for paying all property taxes, insurance, maintenance and the tenant pays a fixed rental.
Gross lease
Protection of another person against loss or damage.
Indemnification
One who rents property to another.
Landlord
Contract between the landlord and tenant whereby the possession of property is granted by the landlord to the tenant for specified period of time in exchange for the payment of a specified amount of rent.
Lease
Interest or estate on which the tenant has a lease.
Leasehold
Person to whom the property is rented under a lease.
Lessee
Person who rents the property to another under a lease.
Lessor
Permission to use or occupy property, which may either be expressed or implied and which may not be sold or transferred to another.
License
Charge against a property making it a security interest for payment of a debt, judgment, mortgage or taxes. It is a type of encumbrance.
Lien
Stipulated amount of money that is agreed upon in a contract that one party will pay to the other party in the event of a breach of the contract.
Liquidated damages
A lien granted by law upon a building or other improvement upon land, and upon the land itself, as security for the payment for labor done and/or materials furnished for improvement.
Mechanic's lien
Written instrument that creates a lien upon real estate as security for the payment of a specified debt.
Mortgage
A lease whereby, in addition to the payment of an agreed rental, the tenant assumes the responsibility for the performance and payment of all other expenses relating to the operation and maintenance of the property.
Net lease
Official communication of one party to another.
Notice
Three party agreement whereby one party is released from its obligations under the contract and another party is substituted.
Novation
Promise of the tenant to open and to operate its business in the leased premises for a specified period of time.
Operating covenant
Rental to be paid by the tenant, based upon gross sales (as defined), over and above the base rent.
Overage rent
Money that one will pay for breaking a law of violating part or all of the terms of a contract.
Penalty
Rent to be paid by the tenant for the lease of property which is determined and based upon a stated percentage of the gross sales made by the tenant in the operation of its business in the leased premises.
Percentage rent
In law, an entity having legal responsibility. Legally, a ________ may be a human being, corporation, limited liability company, partnership, governmental entity, or certain other statutory entities.
Person
Diagram showing the proposed or existing use of a specific parcel of land.
Plot plan
Holding, control, or custody of property for ones use, either as owner or as a person with another right.
Possession
Allocation between the parties of their proportionate share of an obligation paid or due.
Proration
In law, the land and everything attached to it. Generally synonymous with the term "real property".
Real Estate
Contractual clause or provision which permits the party who granted an interest or right to take it back under certain specific conditions.
Recapture clause
The right, but not the obligation, of a tenant to continue to lease property at a specified term and rent.
Renewal option
Charge for the use of property as specified in the lease.
Rent
An amendment or attachment to a contract.
Rider
An interest in real estate in which the real estate serves as collateral.
Security interest
Document or diagram which describes the manner in which a parcel of land is to be or has been improved.
Site plan
Legal action in which the court will require a party to a contract to perform the terms of the contract when he has failed or refused to fulfill his obligations.
Specific performance
A law that provides that certain contracts must be in writing in order to be enforceable. Applicable to all real estate contracts except for leases or licenses for periods of less than one year.
Statute of frauds
A lease from a lessee to another lessee.
Sublease
Moving to a lower priority.
Subordination
A clause or document that permits a mortgage or other lien recorded at a later date to take priority over an existing right of another party.
Subordination clause or Agreement
Substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original creditor.
Subrogation
A license to use or occupy lands and buildings at the will of the owner for which there is no specific term of possesion.
Tenancy at will
One who is given possession of real property for a fixed period of time or at will.
Tenant
Period of time during which something is in effect.
Term
When a new tenant assumes all the obligations of the former tenant with the permission of the property owner.
Assignment
Assurance of performance by one party of another party's obligations.
Guarantee
The tenant's portion of a shopping center's expenses; this portion is composed of common area maintenance, taxes, insurance, and any other expenses that the property owner and the tenant have agreed will be paid by the tenant.
Pass-through expenses
A rent that increases in steps by previously agreed-upon amounts over a period of years.
Stepped-up rent
Refers to a tenant's cost net of taxes, insurance, and common area maintenance charges.
Triple net
A measure of the average change in prices over time in a fixed market basket of goods and services.
Consumer Price Index (CPI)
A breakpoint mutually agreed to without utilizing base rent or minimum rent as the basis.
Negotiated breakpoint or Artificial breakpoint
The annual sales volume used to determine whether or not the tenant must pay percentage rent. Also what is the formula?
Neutral breakpoint. Divide the annual rent by the percentage rent rate. Example. If tenant pays $20,000 per year and the natural break point used is 4% then divide $20,000 รท 4% = Neutral breakpoint which is $500,000.
A percentage sales volume which represents the maximum a tenant can pay for rent and extra charges.
Occupancy rate
A rental based on a percentage of sales volume.
Percentage rent
In legal terms, this is consideration for the execution of a lease. In practical terms this is the most material covenant in the lease; that is, it is the only covenant whose breach allows termination.
Rent
Applied to new centers. The assignment of a rent to each space in the shopping center which when totaled should equal the rent set forth in the pro forma.
Rent schedule
Priority money given to partners in the development project as a return on their investment.
Accrued equity preferred return
The rate of return that a potential buyer of the property is willing to accept on the investment.
Capitalization rate (CAP rate)
Revenue derived from reimbursement to the property owner of all expenses that the property owner pays initially and then passes through to the tenant.
Expense reimbursement revenue
The sum of base, percentage, and expense reimbursement revenue paid by the tenant to the property owner.
Gross projected income
HVAC stands for:
Heating ventilation and air conditioning
The income received by the property owner after vacancy expenses, operating expenses, management fees, and non-reimbursable costs have been subtracted from gross revenue.
Net operating income (NOI)
Improvements made by the property owner to the community near the site. These improvement sare usually requested by the local government authority.
Off-site improvements
The expenses paid by the owner to operate the shopping center. Most of these expenses are passed on to the tenants.
Operating expenses
Rent based on a percentage of a tenant's sales. This is usually paid in addition to a minimum or base rent.
Percentage rent
All the costs incurred by the property owner that are not hard costs.
Soft costs
The percentage of leasable retail space in a shopping center that is unleased at any given moment in time.
Vacancy rate
The number of percentage of the population that forms the audience for a particular type of advertising medium, such as the number who read a particular periodical.
Advertising reach
The process of recovering all or part of a leased premises for the remaining term of a lease through a voluntary agreement between landlord and tenant.
Deleasing
The percentage of a shopping center's sales produced by a given merchandise category or tenant divided by the percentage of the center's GLA that is occupied by that tenant or tenants in that category.
Efficiency ratio
Renting space to a tenant who will pay rent and add something positive to the center. This sets a shopping center apart from the competition through a unique ____________.
Merchandising sets a shopping center apart from the competition through a unique tenant mix.
The degree of increase or decrease expressed as a percentage between two figures.
Percentage change
Renting space to tenants in an existing mall, with a view to adjusting the tenant mix to better benefit the center.
Remerchandising
The percentages reflecting the proportions of square footage and/or number of leasable units in a particular merchandise category. General term.
Tenant mix
The geographic territory in which a shopping center's customers reside. These may be classified as __, __, __, depending on the number of shopper trips made to the mall in a given period by residents of tha area.
Trade area may be classified as primary, secondary, or tertiary.
Costs incurred in altering and finishing merchandise to meet the needs of retail customers at the time of sale.
Alteration costs
What the business owns.
Assets
What are two types of assets?
Fixed and Current
An average of the stock on hand at representative dates throughout the year or season.
Average inventory
Report showing the business's financial position on a specific date.
Balance sheet
The discounts for prompt payment by retail companies of purchases earned on the goods sold during a specific period.
Cash discounts
The price at which goods are purchased in the wholesale market.
Cost
Assets that can be converted into cash within 12 months.
Current assets
Those items owed and due within 12 months.
Current liabilities
Charges involved with running the business. Two types of these include?
Expenses (types include fixed expenses and variable expenses)
Things used in the business that are not for sale.
Fixed assets
Operating expenses that are not affected by increases or decreases in sales volume. These are also called?
Fixed expenses or Indirect expenses
Total amount before deductions have been made.
Gross
The difference between the sales and the total cost of merchandise sold.
Gross margin
Gross profit formula
Markup multiplied by sales price
Report showing the business's financial performance over a specific period of time.
Income statement
Average national sales figures for a given retail category (broker down by year, month or season).
Industry averages
First markup placed on an item
Initial markup
The goods on hand at a specified accounting date. The term may refer either to the physical good or to their value.
Inventory
An average of the stock on hand at representative dates throughout the year of season.
Inventory average
The level of debt against assets.
Leverage
Those things that can be claimed against the business; what the business owes.
Liabilities
The ability to convert assets into cash.
Liquidity
The manufacturer's suggested retail price.
List price
Those things owed after 12 months.
Long term liabilities
A selected item that is deliberately sold at less than cost in order to attract customers.
Loss leader
The difference between the net sales and the gross cost of merchandise sold. It is the margin on sales before making adjustments for cash discounts earned and alteration costs.
Maintained markup
Retail price reduction caused by the inability to sell goods at the original or subsequently determined retail price.
Markdown
The difference between the retail selling price of the merchandise and the cost of the merchandise to the retailer.
Markup
The executive in charge of the merchandise division of a store.
Merchandise manager
A forecast, usually by months for a six-month season, of the major elements that enter into gross margin. It normally includes the planning of __, __, __, __, & __.
Merchandise plan normally includes the planning of sales, stocks, purchases, markups, and markdowns
The planning involved in marketing the right merchandise, in the right place, at the right time, in the right quantities and at the right price.
Merchandising
What remains after specified deductions from the gross amount.
Net
Sometimes called retailer's cost price. The amount a retailer must pay for a particular item.
Net price
The amount of money left after all expenses have been paid.
Net profit (or loss)
What the owner actually owns in the business.
Net worth
Monies needed to operate the business, as distinct from outlays to finance the business.
Operating expenses
Income from sources other than the sale of merchandise.
Other income
A synonym for fixed expenses.
Overhead
The gain a business realizes over a period, measured in terms of money.
Profit
The price at which goods are offered for sale.
Retail
Synonym for Net price
Retailer's cost price
The amounts received or accrued to the store in exchange for merchandise sold to customers during an accounting period.
Sales
A number of discounts offered by the manufacturer to the retailer.
Series discounts
The degree of balance between the retailer's inventory and sales, and the speed with which merchandise moves into and out of a department store.
Stock turnover
The manufacturer's or supplier's discount from the suggested list price; it is expressed as a ______?
Trade discount is expressed as a percentage.
Also called direct expenses; operating expenses that are affected by increases or decreases in sales volume.
Variable expenses
A description of the message, themes and creative elements of your advertising campaign. It includes a budget for creative and production services.
Advertising plan
Basic objective data about the shoppers in your market area. _______ statistics includes __, __, __, __, & __.
Demographics include age, sex, income, education, and occupation.
A benefit -- feature, location or concept -- that will distinguish your shopping center in the mind of the consumer. A ______ may be __ or __?
Differential advantage may be real or perceived
The merchant who is recognized by peers as an informal leader among the shopping center's tenants is called the __________. This individual is likely to become the tenant's ___?
Mall mayor is likely to become the tenant's spokesperson
Established by a fee paid to the landlord, this is a pool of monies for which shopping center landlords are totally responsible. The fund has a tenant advisory board.
Marketing or promotion fund
An outline of the various media that you have determined to be most efficient for reaching your target market. It defines exactly which media will be used and when. The plan includes the media buying budget.
Media plan
A not for profit, independent corporation with a board of directors who vote and sign checks. The members pay dues. Monthly meetings and an annual report are required.
Merchants' association
An interpretation of life style issues; how people are influenced and what they spend their money on.
Psychographics
Newsworthy information that, when released to the media, will be published or broadcast as news. It is used as free advertising.
Publicity
The geographic community from which your shoppers come.
Trade area
A selected item deliberately sold at a price lower than the one at which the largest total profit on the item could be realized, in order to attract customers.
Leader or loss leader
Articles of personal property placed within the lease premises by the tenant for the purpose of carrying out its trade or business.
Trade fixtures.
Right of a person legally entitled to possession to the use of the property without interference.
Quiet enjoyment
Sales capture rates are typically used to compare:
The relative sales performances of merchandise categories in general within a shopping center or of different areas of the shopping center.
The factor that when divided into the NOI establishes the value of the income for financing purposes. May vary from lender to lender.
CAP rate
The unfinished tenant space before the tenant completes construction of the space. This usually consists of what basic elements.
The "Shell" usually consists of walls, roof, basic plumbing and electrical to a point.
Refers to tenants offering better quality and/or exclusive merchandise at higher prices.
High end
A report showing a business's financial position on a specific date.
Balance sheet
Money from the tenant to the landlord for the right to operate a business in the center.
Key money
The number or volume of shoppers who visit a shopping center during a specific period of time.
Traffic
Charge that a tenant pays for shared services and facilities such as electricity, security and maintenance of parking lots.
Common area maintenance (CAM)
An administrative system that has the characteristics of both decentralized and centralized admin. systems.
Hybrid decentralized system
An itemized listing and/or allotment of all estimated revenues anticipated and a listing (and segregation) of all estimated costs and expenses that will be incurred in obtaining those revenues over a fixed period of time.
Budget
An outline of expenditures for physical improvements to the property.
Capital budget
A description of the message, themes and creative elements to be used in an advertising campaign.
Advertising plan
An administrative system in which all financial systems, including payroll, accounts receivable and payable, purchases, etc., originate from a home office rather than from individual shopping centers.
Centralized system
An approach that uses all of a shopping center's strengths, both tangible and intangible, in order to achieve the LL'stated objectives.
Asset management
A document that is evidence that an insurance policy has been issued.
Certificate of insurance
A broad form of third-party insurance that covers the policyholder in the event of bodily injury, personal injury and property damage.
Commercial general liability policy
An administrative system maintained at individual shopping centers (bookkeeping, accounting, purchasing, etc.). Each center is responsible for its work but may follow a standardized system.
Decentralized system
The amount the value of property deteriorates in a year - how much the total value is reduced by wear and tear.
Depreciation
A report showing the business's financial performance over a specific period of time.
Income statement
The area surrounding a shopping center from which the center draws its customers.
Market area
A detailed document explaining all the steps and activities a shopping center will use to promote itself during a one-year period.
Marketing plan
An outline of how much income a shopping center has and how that income will be spent.
Operating budget
Monies needed to operate a business, as distinct from outlays to finance the business.
Operating expenses
A management statement that provides net sales, costs, expenses and net operating profit or loss for a fixed period.
Operating statement
The fee paid to an insurance company as an inducement for assuming part of the insured's risk.
Premium
A first-party insurance covering the insured for damages to personal or real property or the loss of its use.
Property insurance
The types and price levels of retail and service businesses within a shopping center.
Tenant mix
Insurance which protects the insured against liability arising out of property or bodily damage to others caused by another party.
Third-party insurance
The geographic area from which a center draws its shoppers. Limits that define this area may be distance, natural barriers such as rivers or man-made obstructions such as a highway that is difficult to cross.
Trade area
Usually part of the financial package provided to managers on periodic basis. It shows the difference between budgeted expectations and actual results.
Variance report
How can a waiver of the coinsurance clause be arranged?
By adding an agreed - or stipulated - amount endorsement to the policy.
What are two kings of risk?
(1) Business: These are entrepreneurial and cannot be insured against. You cannot, for example, insure against not making sales projections of people not coming to a new center.
(2) Static, or nonbusiness: These are external hazards, and they can be insured against. They include, for example, flood, fire and slips and falls.
What are two methods of transferring risk?
Noninsurance: This involves transferring risk to others and includes the use of leases, which transfer risk to tenants. Other options include contracts and agreements with vendors, contractors, and special event organizers that make these entities liable for risk.
Insurance: This allows you to transfer risk to a professional risk bearer - an insurance carrier.

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