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Moderate Risk Detected
This lease contains some unfavorable terms that may warrant negotiation before signing.
đ Key Terms Extracted
AI Verifiedâ ī¸ Risk Analysis
Personal Guarantee Required
Section 14.2 requires a personal guarantee from company principals for the full lease term. This creates significant personal liability exposure.
No Early Termination Clause
This lease contains no early termination option. You would be liable for all remaining rent if you need to exit early.
Unlimited CAM Pass-Through
Section 5.3 allows landlord to pass through all operating expenses with no cap. CAM charges could increase significantly year-over-year.
Broad Assignment Restriction
Section 11.1 prohibits assignment or subletting without landlord consent, which can be "withheld in landlord's sole discretion."
Above-Market Rent
Base rent of $28.85/SF is approximately 12% above current market rates for Class A office in this submarket ($25.70/SF average).
Relocation Clause
Section 18.4 allows landlord to relocate tenant to "comparable space" with only 60 days notice.
Renewal Rent Not Specified
Renewal option exists but renewal rent is "to be negotiated at fair market value" which creates uncertainty.
Insurance Requirements High
Required liability coverage of $5M may exceed typical requirements for this space type.
No Audit Rights for CAM
Lease does not include tenant's right to audit landlord's CAM calculations.
đ ASC 842 Classification Analysis
Based on the extracted terms, this lease would be classified as an Operating Lease under ASC 842.
Classification Test Results:
| Criterion | Test | Result |
|---|---|---|
| Transfer of Ownership | Does lease transfer ownership at end? | â No |
| Bargain Purchase Option | Is there a bargain purchase option? | â No |
| Lease Term | Is term âĨ 75% of economic life? | â No (13%) |
| Present Value | Is PV âĨ 90% of fair value? | â No (45%) |
| Specialized Asset | Is asset specialized with no alternative use? | â No |
No criteria met â Operating Lease
đ Missing Standard Clauses
No provision for rent abatement or termination rights in case of pandemic, natural disaster, or government-mandated closure.
No protection if anchor tenants leave or building occupancy falls below threshold.
No restriction on landlord leasing to competing businesses in the building.
No protection if landlord's lender forecloses on the property.