Finance category
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Rent Stepdown Calculator
Rent stepdowns reduce rent mid-term. This calculator sizes impact.
Stepdown NPV cost
$206,924
Nominal dollar reduction
$216,000
Total PV rent after stepdown
$2,752,182
How the math works
Baseline vs stepdown PV at landlord discount rate gives true cost.
Landlords often over-index on nominal dollar reduction, but the NPV cost of a 12-month 30% stepdown on a $60k rent is closer to $180k-200k at 8% discount — meaningful but usually worth it to preserve a troubled but viable tenant rather than face 6 months of vacancy and re-leasing costs.
How to Use
- Enter starting rent monthly.
- Enter stepdown months and new rent.
- Enter stepback months and restored rent.
- Enter discount rate %.
- Read NPV cost of stepdown.
Frequently Asked Questions
When used?
Tenant distress requiring temporary relief. Market softness with specific stressor (pandemic, construction disruption, anchor loss). Often paired with lease extension or personal guaranty in exchange. Short-duration (6-24 months) most common.
Stepback mechanics?
Rent returns to original schedule, sometimes with catchup. Burn-off rent credit approach: reduce now, add to backload. Net zero dollars but cash flow shifted. Alternative: pure reduction with extension compensating landlord.
Documentation?
Amendment to lease specifying reduction period, trigger events, burn-off provisions, default consequences. Avoid verbal or email-only deals — creates disputes at restoration. Landlord often requires updated financials during stepdown period.
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