Title
GPT GIG BOA PORTFOLIO OWNER, LLC Ground Lease Amendment (Ordinance S-48948)
Description
Request to authorize the City Manager, or his designee, to amend Unsubordinated Ground Lease 48819-0 and Unsubordinated Ground Lease 48819-UGL-0 with GPT GIG BOA PORTFOLIO OWNER, LLC (GPT) at 1825 E. Buckeye Road, by changing the terms to allow a combined optional investment of $11,000,000 for improvements dedicated to the ground leases to be applied to a third related Ground Lease 102545 with JPMorgan Chase Bank at 1820 E. Buckeye Road, Phoenix, Arizona.
Report
Summary
On July 1, 1988, the City and Merabank entered into Unsubordinated Ground Lease 48819-0 to lease 965,248 square feet of land (Parcel 1) for the purpose of constructing and occupying a bank office complex. On March 21, 1995, the City and Bank of America National Trust and Savings Association entered into Unsubordinated Ground Lease 48819-UGL-0 to lease 667,471 square feet of land (Parcel 2) for the purpose of constructing and occupying a bank office complex. On Dec. 6, 2002, the City entered into a Lease Assignment and Assumption Agreement transferring the interests in Parcel 1 and Parcel 2 to GPT.
On Feb. 20, 2019, both lease agreements with GPT were amended to identify a tenant improvement minimum investment of $7,480,000 for Parcel 1 and $3,520,000 for Parcel 2 for a combined total of $11,000,000 between the two parcels. Tenant improvements for both parcels are to be completed by Nov. 29, 2037, as consideration for additional term.
On Dec. 1, 2002, the City and Bank One, N.A. entered into an Unsubordinated Ground Lease 102545 to lease 653,400 square feet of land (Parcel 3) for the purpose of constructing and occupying a bank headquarter facility. Through a series of executed acquisitions and assignments and an additional proposed assignment, Parcels 1, 2 and 3 will be consolidated under one tenant, Link Logistics Real Estate (Link).
Link is requesting the required $11,000,000 combined total in tenant improvements for Parcels 1 and 2 to be reallocated to Parcel 3 to fulfill the tenant improvement requirement to extend the term on the leases to Parcels 1 and 2.
Contract Term
The current lease terms for Parcel 1 and Parcel 2 expire on June 30, 2053. If the tenant obligations are met, then the term for both leases will be extended to Nov. 29, 2067. The term of the lease to Parcel 3 expires on Nov. 30, 2067. This action creates no change to the term of the lease to Parcel 3.
Financial Impact
If amended, there would be no impact to rent. Current annual rent for Parcel 1 is $971,597 and $621,540 for Parcel 2. Rent will be adjusted annually based on the Phoenix-Mesa-Scottsdale, All Urban Consumers Price Index.
Concurrence/Previous Council Action
The City Council approved Ground Lease 48819 Amendments (S-45116) on Nov. 7, 2018.
Location
Phoenix Sky Harbor International Airport - 1825 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.