Kickout Right Value Calculator

Kickout clauses are real options. This calculator sizes their value.

Annual rent

Remaining term years

Trigger probability %

Termination fee

Replacement cost avoided

Discount rate %

Kickout option value

$926,794

Rent PV saved

$3,447,983

Net benefit if triggered

$2,647,983

How the math works

Rent PV = sum of discounted remaining rents. Net if triggered = rent PV − fee − replacement cost avoided. Option value = net × probability (floored at 0).

$600k × 8 yrs at 8% = $3.45M PV. Less $500k fee + $300k alt cost = $2.65M net. × 35% trigger = $928k option value. Material asymmetric right.

How to Use

Enter annual rent.
Enter remaining term years.
Enter trigger probability %.
Enter termination fee.
Enter replacement cost if stay.
Enter discount rate %.
Read kickout option value.

Frequently Asked Questions

What is a kickout right?

A kickout (or sales-kickout) clause lets the tenant terminate the lease early if sales fall below a stated threshold for a measurement period — typically $X per SF over 12-24 months. Common in big-box and junior anchor deals where tenant sales visibility is limited at signing.

How does it get valued?

Kickout = real option. Value = probability of trigger × (remaining rent obligation − termination fee − replacement cost avoided), discounted. Strong-center tenants rarely exercise; weak-center tenants may exercise with near certainty once triggered, making the option worth 1-3 years of rent.

Impact on landlord economics?

Kickouts compress landlord value because the income stream is shorter in expectation. Lenders haircut kickout-burdened NOI 10-20%. Buyers apply a cap rate premium (25-75 bps) for each major tenant with kickout. Negotiated kickouts should carry a significant termination fee to preserve landlord value.