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Form 9-2: Supermarket Tenant Build-to-Suit Lease Letter of Intent; Tenant Builds Tenant’s Building; Landlord Constructs On- and Off-Site Improvements and Purchases Building after Tenant’s Completion


(21 pages)


Form addresses:

  • Tenant.

  • Lease term (and options).

  • The tenant's parcel and leased premises.

  • Area of major tenant's parcel and adjustments thereto.

  • Parcelization (recommended but optional).

  • Landlord's construction of on- and off-site work.

  • Specific items included within "Site Work or "Site Costs".

  • Tenant's construction of Building.

  • Specific items included within the cost of the building (building design/construction, building studies, permits, financing expense and any other direct costs for the building. Note: in this form governmental impact fees or assessments are not included in the Building Cost but are included in Site Costs.)

  • Specific items not included within the "Building Cost" (shopping center grading plan, center processing fees such as for site plan review and on- and off-site costs).

  • Landlord's purchase of completed building.

  • Annual rent (after Building Transfer Date) as the sum of Building Cost Rent, Site Costs Rent and Land Rent.

  • Increase (or decrease) in Building Rent based upon unexpected increase (or decrease) in Building Cost.

  • Increase (or decrease) in Site Costs Rent based upon unexpected increase (or decrease) in Site Costs.

  • Mutual lease cancellation right if Site Costs exceed an Agreed Maximum.

  • Increases to annual rent based upon Increases in Consumer Price Index.

  • Percentage Rent.

  • Rent Commencement: various landlord or tenant oriented alternatives.

  • Preliminary Rent: Pre Building Transfer Rent, Rent if Landlord Fails to Purchase Building from Tenant, Post Building Transfer Rent.

  • Building repair and maintenance.

  • Real estate taxes and assessments.

  • Common area maintenance.

  • Insurance.

  • Utilities.

  • Signs.

  • Assignment and subletting.

  • Developer oriented: Obligation of tenant to open fully stocked with short-term operating covenant.

  • Developer oriented "go dark" termination/re-purchase right.

  • Major tenant oriented co-tenancy clause.

  • Major tenant oriented optional "Concurrent Shops Construction" clause

  • Example: Food and Drug Restrictions.

  • Major tenant oriented "Use Restrictions".

  • Commissions.

  • Conditions which must be approved by tenant's real estate committee (final site plan, access, investigations and documentation).

  • Financing contingency (developer oriented).

  • Non-binding letter.

  • Landlord oriented optional "Landlord Limited Exclusive Right": For a fixed period following execution of this letter tenant promises to (i) make a good faith effort to obtain real estate committee approval for the proposed transaction and (ii) not negotiate with other land owners within an agreed radius of the site.

  • Exhibit: Sample "Building Specifications" used to describe the construction items to be included in the cost of tenant's building.

  • Exhibit to provide for major shopping center pylon or monument signs.

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