Two or three weeks ago, we were working on a portfolio acquisition. There was an outparcel ground lease tenant that had the right to purchase its premises if the landlord ever sold the property. Our client asked the seller for the tenant’s release from its option to purchase the parcel. The seller replied that it did not apply because the sale was part of the larger parcel. “It’s standard” was the response.
Is that typical? Absolutely. But, in almost every purchase option I have ever reviewed (hundreds, possibly pushing thousands), the purchase option reads “unless the sale if part of the larger sale of the center.” Almost. Those words have to be in the lease.
I can’t tell you the number of leases that are out there that require the tenant to deduct contributions from anchors, variety and other defined excluded areas, but continue with excluding only the square footage of the anchor tenants. Is is “standard” (most typical) to exclude both the square footage of all tenants whose contributions are being deducted. Again, absolutely! But, not always. Along the same lines, there are times when the square footage of anchors, variety and outparcels are defined to be deduction from the denominator, but only the contributions of the anchors (or in some cases, no contributions at all) are to be deducted. Is it standard to match square footage with contributions? Absolutely. But, unless it’s a mom and pop tenant, there are exceptions to what is “standard” in every lease.
Don’t assume something is “standard.” Spell it out! Don’t let it come back and bite you!