Is it rare for restaurants to have a FMV adjustment when exercising a lease option?

Current tenant is trying to sell his (successful) restaurant. The new buyer wants a 25 year lease with 2% annual increases on base rent with no FMV adjustment throughout the life of the lease. He is also proposing additional rent on 6% of sales, which based on current sales would increase the rental income by about 8%. New tenant wants us to contribute 50% to improvements with the income that exceeds the current base rent. Our concern is that market rate for rents is now about $2.25 sq foot, but was 3.25 sq ft in 2001. IF rents rebound at some time in the future, we have no method for adjusting to FMV for a very long time.
In Leasing Property - Asked by Cliff R. - Aug 4, 2011
Report Abuse
Answer this Question

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question