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Updated almost 3 years ago,
Communication Pre-close with Key Tenant in Retail Acquisition
I'm analyzing a retail building that has a NNN tenant that represents 59% of rental revenue (7,500 out of 15,000 sq ft). This tenant has a 5 year lease with four 5 year options to extend the lease by another 5 years (they have already exercised the option 2 times so they are on year 12 of the 5 year lease). The lease option is ending in August 2024 (2.5 years from now). The tenant is a corporate and there is a dedicated real estate employee who runs their real estate operations. I'd like to reach out to the tenant's real estate employee and ask about their plans for the space going forward, if they need additional improvements to the space, and if they plan to exercise the option in 2024. Obviously, the broker would probably prefer me not to reach out, but is the #1 risk to the deal.
How would you go about finding out this information? What is appropriate? My guess is if I ask the broker and he will say "you can't contact the tenant, but they plan to exercise the option". The space is large enough, where if the tenant decides to leave in 2024, it would result in significant capex in order to adjust the space to fit other tenants + the rates would probably be lower.