Lease Negotiation Analyzer

Scenario Selector

Lease Negotiation Analyzer -- Select Scenario:
(a) Anchor Replacement: co-tenancy cascade, dark store, split vs. single tenant
(b) Trophy Tower Backfill: mark-to-market, sub-divisibility, concession NPV
(c) Large Tenant with Naming Rights: valuation, exclusivity, parking ratio
(d) Life Science Tenant: TI amortization, credit enhancement, ROFR/ROFO
(e) Sublease Consent: profit-sharing, recapture NPV, lender consent, co-working risk
(f) Exclusive Use Violation: clause interpretation, damages, 3-scenario resolution
(g) Specialty Conversion: exit risk, utility infrastructure, environmental, IRR crossover
(h) Ground Lease TI: improvement reversion, rent reset, leasehold financing, FMV

Auto-detect scenario from user description if not explicitly selected. Support selecting multiple scenarios for cross-referenced situations.

Input Schema

Common (All Scenarios)

Scenario-Specific Inputs

Scenario (a) -- Anchor Replacement: vacant SF, prior tenant, months vacant, inline tenants with co-tenancy clauses, co-tenancy clause details, prospect and requirements.

Scenario (b) -- Trophy Tower Backfill: departing tenant SF, notice months, in-place rent PSF, market rent PSF, custom buildout, floor count.

Scenario (c) -- Naming Rights: prospect SF, vacancy %, requested term, options, naming rights flag, preferred parking flag.

Scenario (d) -- Life Science: prospect SF, TI PSF, prospect credit stage, requested term, expansion SF, adjacent tenant remaining term.

Scenario (e) -- Sublease Consent: master tenant SF, remaining term, sublease SF, sublease rent vs. master, subtenant type, loan restrictions.

Scenario (f) -- Exclusive Use: complaining tenant, exact exclusive clause language, new tenant, new tenant rent PSF, overlap product.

Scenario (g) -- Specialty Conversion: building SF, current vacancy, proposed use, capital investment, proposed lease term, rent premium %, current flex rent PSF.

Scenario (h) -- Ground Lease TI: remaining term, tenant type, improvement description, estimated cost, rent abatement requested, removal flexibility requested.

Process (Consistent 5-Part Structure Per Scenario)

Part 1: Situation Assessment

• Scenario classification and key variables
• Stakeholder map (tenant, landlord, lender, other affected tenants)
• Time pressure analysis (how urgently must this be resolved?)
• Constraints and non-negotiables

Part 2: Financial Analysis

Each scenario has its own financial models:

(a) Anchor Replacement:

• Co-tenancy cascade model: per-tenant clause trigger analysis, cumulative NOI erosion at 6/12/18 months of continued vacancy
• Dark store analysis: does departing anchor lease allow going dark while paying? Financial comparison of dark anchor vs. re-tenanting
• Split vs. single tenant NPV: single tenant (lower TI, faster execution, anchor co-tenancy cure) vs. split (higher aggregate rent, diversification, higher TI, demising costs)
• Cycle-adjusted leasing timeline with absorption rate

(b) Trophy Tower Backfill:

• Mark-to-market: in-place vs. market vs. asking vs. effective rent analysis
• Sub-divisibility analysis: floor-by-floor options, multi-tenant feasibility, demising costs, optimal unit mix
• Concession NPV: free rent + TI + moving allowance as % of total lease value, benchmarked against recent comparables

(c) Naming Rights:

• Naming rights valuation: comparable transactions, cost of equivalent advertising, brand premium on rent, incremental leasing velocity
• Exclusivity economics: revenue foregone, conflict probability, premium tenant should pay, carve-outs
• Parking ratio negotiation: fair share vs. requested, impact on other tenants, revenue impact

(d) Life Science:

• TI amortization structures: landlord-funded (rent premium), tenant-funded (rent credit), hybrid, TI loan with schedule
• Credit enhancement sizing: LC at 12-24 months rent + TI amortization shortfall, burn-down schedule, VC fund commitment analysis
• ROFR vs. ROFO for expansion: marketing chill analysis, must-take alternative, contraction modeling

(e) Sublease Consent:

• Profit-sharing structure: confirm tenant liability for shortfall, require 50/50 profit share if sublease exceeds master, define "profit" to include TI and brokerage
• Recapture NPV: recapture and re-lease at market (higher rent, vacancy risk, TI) vs. consent to sublease (no vacancy, lower rent)
• Lender consent: loan covenant review, co-working restrictions, default risk, alternative structures
• Co-working risk: subtenant credit quality, membership cancellation risk, building character impact

(f) Exclusive Use Violation:

• Clause interpretation: primary vs. incidental use, percentage of revenue/floor area tests, industry precedent
• Damages quantification: tenant claimed damages (lost sales, reduced percentage rent), landlord exposure (rent reduction, termination right)
• Three-scenario resolution NPV: restrict new tenant mix, release complaining tenant from exclusive, negotiate settlement

(g) Specialty Conversion:

• Exit risk: alternative use analysis, market depth for cold storage/data center tenants, lease protection provisions
• Utility infrastructure: capacity vs. requirements, upgrade cost, who pays, backup power
• Environmental permits: refrigerant regulations, permit timeline, liability allocation, decommissioning
• IRR crossover: at what rent premium does the capital investment achieve target returns? Compare to leasing as-is

(h) Ground Lease TI:

• Improvement reversion: value at lease end, restoration obligation cost, landlord interest in retaining
• Rent reset: abatement during construction (with delay penalty), post-construction reset based on enhanced value
• Leasehold financing: lender requirements, landlord consent, non-disturbance provisions
• FMV determination: appraisal methodology (land only), comparables, dispute resolution (baseball arbitration)

Part 3: Risk Assessment

Top 5 risks per scenario, ranked by probability x impact:

#    Risk                        Probability    Impact    Mitigation
1    [scenario-specific]         High           High      [specific action]
2    ...                         ...            ...       ...

Worst-case scenario quantification: what is the maximum financial exposure if everything goes wrong?

Part 4: Recommended Deal Terms

Standardized term sheet format for every scenario:

Premises:           [description]
Term:               [years]
Commencement:       [date/condition]
Base Rent:          [$/SF/year with escalation]
Escalations:        [annual bumps]
TI Allowance:       [$/SF]
Free Rent:          [months]
Other Concessions:  [scenario-specific]
Options:            [renewal, expansion, termination, purchase]
Special Provisions: [scenario-specific: co-tenancy, naming rights, recapture, etc.]
Landlord Protections: [LC, guarantee, insurance, use restrictions]

Part 5: Negotiation Strategy

• Opening position: initial offer with rationale
• Target: realistic expected outcome
• Walk-away: minimum acceptable terms
• Leverage points: what gives you negotiating power
• Concession sequencing: what to give first, what to hold back
• Fallback positions: if primary strategy fails
• Timeline to execution: realistic negotiation calendar

Output Format

1. Scenario Selector (if auto-detected, confirm scenario identification)
2. Part 1: Situation Assessment -- classification, stakeholders, time pressure
3. Part 2: Financial Analysis -- scenario-specific models and sensitivity tables
4. Part 3: Risk Assessment -- top 5 risks with probability, impact, mitigation
5. Part 4: Recommended Deal Terms -- standardized term sheet
6. Part 5: Negotiation Strategy -- opening, target, walk-away, sequencing

Red Flags & Failure Modes

• Co-tenancy cascade underestimation: the cascade effect is non-linear. Losing the anchor may trigger rent reductions for 8 inline tenants simultaneously. Model every clause.
• TI amortization without residual analysis: $450/SF lab TI on a 10-year lease has zero residual value. The rent premium must fully amortize the TI. If the tenant defaults at year 5, the landlord eats $225/SF.
• Recapture right not analyzed: in sublease situations, recapture and direct re-leasing may produce higher NPV than consenting to a below-market sublease.
• Exclusive use clause ambiguity: "exclusive for athletic footwear" means different things to different judges. Always assess litigation probability before recommending a position.
• Specialty conversion single-use risk: $8M invested in cold storage infrastructure that has zero value if the tenant leaves. Lease protections (long notice, above-market termination penalties) must match the investment risk.
• Ground lease FMV disputes: FMV rent resets without a pre-agreed methodology will go to arbitration. Specify the methodology in the deal terms.

Chain Notes

• Upstream: market-memo-generator (market data feeds assumptions). deal-underwriting-assistant (property valuation context).
• Peer: tenant-delinquency-workout (default scenarios escalate to re-tenanting). lease-compliance-auditor (exclusive use violations surface in compliance audit).
• Downstream: rent-optimization-planner (new lease terms set market benchmarks). capex-prioritizer (TI commitments become capex items).