Leases and inflation

By soulinrevolt on Wed, May 17, 2017 - 5:44pm

To All and Sundry,

I do not profess to have the business acumen of most people on this sight.  I am an English teacher and gardener by trade.  I have a concern, however, that I would appreciate as much input as possible from anyone who might have insight into my quandary.

My sister and I inherited a piece of commercial property.  Recently the tenant, after a 20 year stay, moved a few lots down and bought land to build on.  We are now negotiating a lease with a top tier fast food franchise for another 20 years.  They are a solid entity with substantial assets.  We are getting a good price with 10% increases every 5 years.  What they will not do, however, is any kind of "overage" or "break-even clause."  And they absolutely balk at tying the rental increases to the CPI measure.  I have listened to the inflation/deflation debate so many times I can't count, and they both make sense to me.

My question is: am I being overly concerned?  Any thoughts or advice are greatly appreciated.



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