Title
Amend Sky Harbor Center Ground Lease with GPT GIG BOA Portfolio Owner, LLC (Ordinance S-45116)
Description
Request to authorize the City Manager, or his designee, to enter into an amendment to ground lease 48819 with GPT GIG BOA Portfolio Owner, LLC (GPT) to extend the term of the ground lease 14 years and five months for lots one and two. The amendment may contain other terms and conditions deemed necessary or appropriate by the City Manager or his designee. Beginning Jan. 1, 2019, annual rent for both lots will be approximately $1,466,303. Rent will be adjusted annually according to the Consumer Price Index.
Report
Summary
GPT requested that the term of its ground lease for two lots located at 1825 E. Buckeye Road in Sky Harbor Center be extended 14 years and five months. In exchange for the extended term, GPT will invest $11 million in capital improvements on the site by the end of calendar year 2025, and complete construction of the improvements prior to the end of calendar year 2037. If GPT fails to construct the improvements, then the extended term will be removed from the ground lease and the original expiration date of June 30, 2053 will remain. GPT owns the current building and Bank of America is the current tenant.
The rent during the extended term will be established by conducting an appraisal by an independent appraiser to set the fair market value of the land. Rent for the first year of the extended term will be set at the higher of the appraised value or the rent due for the final year of the current term. Rent will be adjusted annually thereafter according to the Consumer Price Index. Standard lease provisions will be updated. All other terms and conditions of the ground lease will remain the same.
Contract Term
The term will be extended 14 years and five months and will expire on Nov. 29, 2067.
Financial Impact
Beginning Jan. 1, 2019, annual rent for both lots will be approximately $1,466,303. The rent will be adjusted annually according to the Consumer Price Index.
Concurrence/Previous Council Action
This item was recommended for approval by the Phoenix Aviation Advisory Board on Sept. 20, 2018 by a vote of 6-1.
Location
1825 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Aviation Department.