Tackling inefficiency.
With our Turn-Key Lease (“TKL”), you can get TI packages for the full balance of your buildout, right from your landlord. Stop burning your cash, convert your CapEx for TI to rent.
Why own TI in space you lease?
For over 40 years, corporate and GSA tenants have handled tenant improvements the same way; negotiate a TI allowance through the landlord, and amortize it as rent over the space lease term. The remaining balance of TI, however, must be funded by the tenant with either cash or debt.
This is inefficient for two reasons: (i) tenant improvements are non-revenue-producing assets with no residual value, so any cash spent on them is dead capital; (ii) the cost of funds on space lease TI allowances can often be significantly higher than cost of debt for Fortune 1000 occupiers. However, because of (i), they have been willing to pay significant premiums just to keep the TI off their balance sheet. We’re here to change that.
Turn-Key TI Lease ("TKL")
Our structure delivers three crucial advantages.
Firstly, the cost of debt on the TI lease is tethered to the occupier’s outstanding senior unsecured notes, meaning they no longer have to pay significant premiums for TI.
Secondly, beyond saving cash, TKL also brings savings on occupancy cost for GAAP-reporting companies, in addition to savings on the net present value of after-tax cash flows associated with TI.
Finally, the TI lease receives Operating Lease treatment for GAAP-reporting companies, allowing for single-lease accounting in conjunction with the space lease. It is also considered a true lease for tax purposes.