Jan 24 in Commercial Real Estate
Renewing a Dollar Tree Lease
We are working on renewing a Dollar Tree lease that’s a tenant in a center we purchased last year.
The tenant occupies 17,089sqft and currently pays $6.00/sqft
They have proposed a 5 year extension at $6.50/sqft with 4 months of free rent along with us helping replace one of the HVAC units that is becoming old and experiencing issues.
Here is what we are countering them…
PPSF: $6.50
Free Rent Months: 0
TI Allowance for HVAC: $15,000
One 5-Year Option at $8/sf
The counter terms would result in a a Net Effective rent of $6.32/sf. Once we factor in our leasing commission of 2% ($11,107) and the $15,000 of TI it brings our net effective rent per square ft over the 5 year term to $6.19
This makes this lease worth $1,322.261 at an 8 CAP rate and we lock in this tenant for another 5 years securing rent of $544,284.
In commercial, all of the value comes from the lease its terms. Know your leases!
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Renewing a Dollar Tree Lease
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