Rent Stepdown Exposure Calculator

Stepdowns cut rent. This calculator sizes exposure.

Base annual rent

Stepdown %

Stepdown duration months

Trigger probability %

Discount rate %

Expected NOI loss

$83,333

Loss if triggered

$360,000

Monthly loss if triggered

$15,000

How the math works

Loss if triggered = rent × stepdown % × months/12. Expected = discounted × probability.

$600k × 30% × 2 yr = $360k triggered loss. Discounted at 8%, × 25% prob ≈ $77k expected loss. Manageable at probability, painful if triggered.

How to Use

Enter base annual rent.
Enter stepdown %.
Enter stepdown duration months.
Enter probability %.
Enter discount rate %.
Read expected NOI loss.

Frequently Asked Questions

What is a stepdown?

Negotiated temporary rent reduction tied to a trigger: tenant sales below threshold, market occupancy below level, recession declaration. Different from abatement — stepdown pays reduced rent rather than zero. Allocates recession risk between parties.

Common triggers?

Sales-based: e.g., rent drops to 6% of sales if sales fall below threshold. Occupancy-based: small shop rent drops if center occupancy falls below 75%. Economic: rent reduces by X% if market rents drop Y% for 12+ months.

Valuation impact?

Stepdown exposure reduces effective NOI in downside scenarios. Lenders haircut debt service coverage assuming stepdown triggers. Buyers apply cap rate premium. Stepdowns are structured flexibility — useful for retention, but costly to model accurately.