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Rolling Option To Extend Calculator
Rolling options give tenant perpetual optionality at a small rent premium.
Total premium cost
$50,000
Annual premium
$5,000
Premium-inclusive rent
$505,000
How the math works
Annual premium = base × premium %. Total = annual × years.
$500k × 1% = $5k/yr × 10 = $50k total premium for rolling optionality.
How to Use
- Enter base rent.
- Enter rolling option premium %.
- Enter years.
- Read rolling premium cost.
Frequently Asked Questions
Rolling mechanics?
Tenant can renew at fair-market minus discount as long as they give notice and rent is current. Landlord effectively commits to multi-decade relationship. Typical rent premium 0.5-2% annually to compensate landlord for option cost.
Who benefits?
Tenant: massive flexibility, stable location, below-market rent optionality. Landlord: stable tenant, reduced re-leasing risk, small premium. Downside for landlord: loses upside if market booms significantly.
Structures?
Anchor retail: 5-year rolling options common (grocery, drugstore). Office: 1-3 year rolling options less common. Industrial: 5-10 year options common. Ground lease: 10-year options standard for institutional leases.
How often should I rerun this?
Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.
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