Rent abatement is a clause in a lease agreement that allows tenants to temporarily reduce or suspend rental payments under specific circumstances, such as when the property becomes uninhabitable due to damage or repairs. This clause ensures that tenants are not financially responsible for issues beyond their control while providing landlords time to address the situation.
Expansion Premises Base Rent Abatement. Provided that no event of default occurs during the seven (7) month period commencing on the first (1st) day of the first (1st) full calendar month of the Suite 525 Expansion Term and ending on the last day of the seventh (7th) full calendar month of the Suite 525 Expansion Term (the "Suite 525 Base Rent Abatement Period"), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the Suite 525 Premises during such Suite 525 Base Rent Abatement Period (the "Suite 525 Base Rent Abatement").
Additional Rent Abatement. Additional Rent for the ROFR Space shall be abated in its entirety from the Effective Date through January 28, 2023. Tenant’s obligation to otherwise pay Additional Rent under the Original Lease and as to the Original Premises shall not be affected.
Base Rent Abatement. The Base Rent Abatement set forth in Section 7.5 of the Lease shall not apply to the Extension Term. Provided that Tenant is not in monetary default (without reference to any notice or cure periods) or material non-monetary default (beyond applicable notice and cure periods) under the Lease, Landlord agrees to abate Tenant’s obligation to pay Base Rent for the Premises for the first two (2) months of the Extension Term (the “Extension Term Base Rent Abatement”). The period of time in which Tenant is entitled to any Extension Term Base Rent Abatement shall be referred to herein as the “Extension Term Base Rent Abatement Period.” During the Extension Term Base Rent Abatement Period, Tenant will remain responsible for the payment of the Property Management Fee (which shall be calculated as if there were no Extension Term Base Rent Abatement and Tenant were paying Base Rent of $44,484.00 per month), utilities, Tenant’s Adjusted Share of Operating Expenses and all Additional Rent attributable to the Premises. Tenant acknowledges and agrees that the foregoing Extension Term Base Rent Abatement has been granted to Tenant as additional consideration for entering into this Amendment, and for agreeing to pay the Base Rent and perform the terms and conditions otherwise required under the Lease. If Tenant shall be in monetary default (without reference to any notice or cure periods) or material non-monetary default (beyond applicable notice and cure periods) under the Lease, then Tenant’s right to receive the Extension Term Base Rent Abatement for the Extension Term Base Rent Abatement Period shall automatically terminate and Tenant shall immediately be obligated to begin paying Base Rent for the Premises in full. The Extension Term Base Rent Abatement shall be personal to the original Tenant and any Tenant’s Affiliate that assumes the original Tenant’s interest in the Lease pursuant to an Exempt Transfer and shall only apply to the extent that the original Tenant or a Tenant’s Affiliate that assumes the original Tenant’s interest in the Lease pursuant to an Exempt Transfer (and not any assignee, or any sublessee or other transferee of the original Tenant’s interest in this Lease pursuant to a Transfer that is not an Exempt Transfer) is the Tenant under this Lease during the Extension Term Base Rent Abatement Period.
Rent Abatement. Tenant shall be entitled to receive an abatement of Minimum Rent otherwise payable to Landlord for the first three (3) months of the Renewal Term (the “Rent Abatement”). Tenant acknowledges and agrees that the foregoing Rent Abatement has been granted to Tenant as additional consideration for entering into this Fourth Amendment, and for agreeing to pay the rental and performing all of the terms and conditions otherwise required under the Lease. Tenant shall not be entitled to abatement of any other amounts due under the Lease except as expressly set forth herein, including (without limitation) Tenant’s obligation to pay Tenant’s share of real estate taxes, insurance costs and utility charges at all times during the Renewal Term.
Base Rent Abatement. Provided a Default does not then exist under the Lease, Landlord hereby grants Tenant an abatement (“Base Rent Abatement”) of the Base Rent payable under the Lease with respect to the entire Premises for the 5 month period beginning on October 1, 2021 and ending on February 28, 2022. Thereafter, Tenant shall pay the full amount of Base Rent due in accordance with the provisions of the Lease. The Property Management Fee set forth in Section 9.2(w) of the Lease shall not be abated and shall be based on the amount of Base Rent that would have been payable but for the Base Rent Abatement.
Base Rent Abatement for First Phase. Provided that no event of default is occurring, and subject to the terms of this Section 3.2 below, then during the last nine (9) months of the Lease Term (collectively, the “Base Rent Abatement Period”), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the portion of the Premises consisting of the entire Premises, less the third (3rd) floor of 450 Concar North Tower (the “First Phase”), during such Base Rent Abatement Period (collectively, the “Base Rent Abatement”). Tenant acknowledges and agrees that the foregoing Base Rent Abatement has been granted to Tenant as additional consideration for entering into this Lease, and for agreeing to pay the Rent and perform the terms and conditions otherwise required under this Lease. Notwithstanding the foregoing, unless an Abatement Condition then exists, Landlord shall, on a month by month basis commencing on the Lease Commencement Date, accelerate any remaining Base Rent Abatement relating to a full month during the Base Rent Abatement Period for the First Phase forward, to apply to the Base Rent that would otherwise be due with respect to the next occurring month of the Lease Term (the “Landlord Base Rent Abatement Acceleration Election”), in which case Tenant shall have no obligation to pay Base Rent attributable to the First Phase for such next occurring month of the Lease Term, and the Base Rent Abatement that is accelerated forward shall no longer be applicable during the Base Rent Abatement Period. Landlord may make such election on a month by month basis with respect to each of the months of the Base Rent Abatement Period. In addition, commencing on the Lease Commencement Date, if Landlord has not exercised the Landlord Base Rent Abatement Acceleration Election on or before the date that the next installment of Base Rent is due under the Lease, and provided that the Lease has not been terminated as a result of any default of Tenant or rejection of the Lease in bankruptcy (the “Abatement Condition”), then Tenant shall have the right, at Tenant’s option, on a month by month basis commencing on the Lease Commencement Date, to accelerate any Base Rent Abatement relating to a full month during the Base Rent Abatement Period forward to apply to the Base Rent that would otherwise be due with respect to the next occurring month of the Lease Term (the “Tenant Base Rent Abatement Acceleration Election”), in which case Tenant shall have no obligation to pay Base Rent attributable to the First Phase in such next occurring month of the Lease Term, and the Base Rent Abatement that is accelerated forward shall no longer be applicable during the Base Rent Abatement Period. Tenant may not elect to accelerate more than one (1) month of such Base Rent Abatement at any particular time.
Abated Base Rent. Provided that Tenant is not then in material or monetary default of the Lease beyond applicable notice and cure periods, then during the first two (2) full calendar month(s) of the Extended Term (the “Rent Abatement Period”), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the Premises during such Rent Abatement Period (the “Rent Abatement”). Landlord and Tenant acknowledge that the aggregate amount of the Rent Abatement equals $488,510.40 (the “Abated Base Rent”). Tenant acknowledges and agrees that the foregoing Rent Abatement has been granted to Tenant as additional consideration for entering into this Amendment, and for agreeing to pay the rental and performing the terms and conditions otherwise required under the Lease. If Tenant shall be in material or monetary default under the Lease and shall fail to cure such default within the notice and cure period, if any, permitted for cure pursuant to the Lease, and the Lease is terminated thereafter, then Landlord may at its option, by notice to Tenant, elect, in addition to any other remedies Landlord may have under the Lease, that Tenant shall immediately become obligated to pay to Landlord all unamortized Abated Base Rent (i.e., based upon the amortization of the Abated Base Rent in equal monthly amounts, without interest, during the period commencing on the Extended Term Commencement Date and ending on the Extended Term Expiration Date).
The lease for the Building 3 Premises (the “Building 3 Lease”) will commence on or about August 1, 2020 and shall continue for a period of 6.5 years (the “Building 3 Initial Term”). The initial monthly rent during the Building 3 Initial Term will be approximately $0.6 million, with annual year-over-year increases of approximately 3%, with rent abatement for the first 24 months after the rent commencement date of September 1, 2020 (resulting in approximately $7.2 million of rent abatement). In addition, the Company will be required to pay its proportionate share of property maintenance and operating expenses. As part of the Building 3 Lease, the Company must provide a security deposit, in the form of a letter of credit in lieu of cash, of approximately $3.0 million. The Landlord will provide a tenant improvement allowance of approximately $1.2 million.
Rent abatement is a provision in a lease agreement where the tenant is temporarily allowed to reduce or eliminate rent payments. This provision is typically included to account for situations where the tenant cannot use the leased property, often due to circumstances beyond their control, such as significant property damage or delayed possession. By including a rent abatement clause, parties establish a mechanism for financial relief for the tenant while maintaining the landlord-tenant relationship.
Rent abatement should be considered in scenarios where there might be disruptions in the tenant’s ability to utilize the leased space. Common situations include:
Including a rent abatement clause can protect the tenant from paying for a space they cannot use and provide clarity on specific conditions that trigger abatement.
When drafting a rent abatement clause, it is important to be clear and specific to avoid future disputes. Here are key components to include:
Rent Abatement Clause: In the event that the Premises are rendered unusable due to unforeseen structural damages or a delay in possession beyond thirty (30) days of the stipulated commencement date, Tenant shall be entitled to an abatement of rent in full, until such time as the Premises are rendered usable.
Rent abatement provisions are commonly found in various types of lease agreements, including:
In each of these types of contracts, rent abatement clauses provide a level of security and predictability for both parties involved.
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