LEED CI 2009 _ MR Cr1.1_Tenant Space- Long Term Commitment

Kusha Dogra Sehgal

Aecom

LEEDuser Basic Member

0 thumbs up

Project location :

Thailand

April 26, 2016

I am currently working on LEED CI 2009 project. LEED CI 2009 MR Cr1.1_Tenant Space- Long Term Commitment, says that the tenancy contract between owner of building and the tenant (who is applying for LEED rating) should be at least 10 years. My clients in Bangkok have the following tenancy structure : 1. Owner of the building "A" has signed a MOU with the Property Dealer "B". As per Memorandum Of Understanding, "B" shall manage & develop the property for real estate business. 2. "B" has leased this property to a company "C" for a period of 15 years wherein company "C" has to get it renewed after every 3 years within these 15 years time. The words written in tenancy agreement are, "By an Addendum of the Lease Agreement, Company B granted Company C an opinion to renew of the building lease every 3 years totaling 15 years starting from 1st April 2015 and ending on 31 March 2030" 3. Company "C" has further sub-leased the property to company "D" for a period of 12 years in July 2015 which is also to be renewed once in every 3 years. Upon renewal, the only change in contract will be the increase of rental by 12% for next 3 years and so on. Our project owner is company "D". As per the above given tenancy structure, I want to highlight again : 1. Tenancy agreement between company B & C is 15 years 2. Tenancy agreement between company C & D is 12 years But, for both of these agreements, there a clause where the lease needs to be renewed after every 3 years in order to reflect the hike in rent by 12% Kindly advice if above tenancy structure allows it to fall under "Tenant Space - Long Term Commitment" and that, we can score the point for it. Thanks for your advice.

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Steve Loppnow

Sustainability Account Manager

Stok

LEEDuser Expert

177 thumbs up

Mon, 06/06/2016 - 21:54

It sounds to me like this meets the intent of the credit. Ultimately there is a 15 year lease between the building owner and primary tenant. If there is an option to terminate the lease if party C or D doesn't accept the increased rent, then I don't think that meets the intent of the credit as it's really just a 3 year lease with an option to extend. If the rent increase is already set, which is sounds like it is, and the renewal of the lease is just a mechanism to increase the rent based on an agreed upon schedule, then I would say this meets the intent of the credit and we are talking about the details of a 15 year lease. Not sure why that schedule and rate increase couldn't be written into a single lease, but ultimately it sounds like the intent of the credit is being met. - In your submittal to GBCI I would clarify whether there is an option to renew (which sounds non-compliant) v. the 3 year rent increase / renewal just being a mechanism of a 15 year lease structure. Without knowing more, I would refer to the intent and explicit 10-year requirement of the credit and check that against your project team's intent.