What this means for the deal
- Keep legal eligibility outside the calculation engine; apply a remedy only through an explicit user-controlled scenario switch.
- Identify whether alternative rent replaces base rent, minimum rent, percentage rent, all rent or only a defined component.
- Model fixed $/SF, percentage-of-sales, flat monthly and lesser-of structures on the same monthly timeline.
- Continue additional rent, other charges and reporting obligations only when the entered reviewed scenario requires them.
- Price go-dark and closure decisions using lost gross margin, avoided costs, one-time costs and rent that continues.
- Control notice, cure, restoration of full rent and termination elections as dated legal workstreams outside the cash result.
A calculation should never decide that the remedy exists
Record the entered co-tenancy or exclusivity condition as not reviewed, satisfied, failed or uncertain only after examining the complete documents and current facts. Then use a separate scenario switch to ask what the economics would be if the entered remedy applied. This preserves the difference between a planning case and an authorized action.
A condition can involve named retailers, replacements, occupied or open area, duration, tenant compliance, notices, cure and elections. Do not code one percentage comparison as a legal trigger. If eligibility is uncertain, keep both the current-rent path and alternative-rent path visible and flag the unresolved decision prominently.
Alternative rent may replace one component while the rest continues
Start with the current rent stack: base or minimum rent, additional rent, property taxes, operating costs, marketing fund, percentage rent, parking, storage, utilities and other charges. Identify the exact component replaced or reduced by the entered remedy. Keep every continuing amount in the scenario rather than describing the outcome as free rent or reduced rent without a basis.
Confirm whether the alternative amount is itself additional rent, minimum rent, percentage rent or another defined payment. Review GST/HST, invoicing, reporting and accounting treatment separately. A negative scenario difference is not automatically a credit, set-off or refund, and a modelled amount is not an approved invoice.
| Component | Entered question | Common modelling error |
|---|---|---|
| Base / minimum rent | Replaced, reduced, suspended or unchanged? | Zeroing all rent without the clause |
| Additional rent | Does recovery continue in full? | Treating co-tenancy rent as gross rent |
| Percentage rent | Is it the alternative formula or an additional amount? | Charging it twice |
| Other charges | Which parking, marketing, storage or utilities continue? | Leaving recurring charges out of the comparison |
| Tax | What entered rate and invoice basis apply? | Treating arithmetic as a tax opinion |
| Reporting | Do sales and operational reports continue? | Stopping administration because rent changed |
Use the formula family that matches the entered wording
A fixed $/SF structure converts an annual area rate to a monthly amount. A percentage-of-sales structure applies an entered rate to an entered sales measure. A flat monthly structure uses the entered amount. A lesser-of structure compares two calculated amounts each period and selects the lower. The actual lease can contain minimums, caps, breakpoints, credits, averaging or period adjustments beyond these planning families.
For a percentage-of-sales alternative, define the sales measure rather than reusing an accounting report without review. Use the separate Percentage Rent & Gross Sales Audit when the result depends on channels, deductions, tiers, proration, reports or audit rights. In a high-level scenario, label sales as a user assumption and sensitivity-test it.
| Method | Monthly planning arithmetic | Verify |
|---|---|---|
| Fixed rate | Area × annual $/SF ÷ 12 | Area basis, timing and escalation |
| Percentage sales | Entered monthly sales × entered rate | Defined sales, reports, deductions and tax |
| Flat monthly | Entered monthly amount | Proration, escalation and inclusions |
| Lesser of | Lower of fixed-rate and percentage-sales amounts | Comparison period and continuing components |
Start, restoration, cure and election dates drive the cash result
Enter the first month and last month of the alternative scenario independently from the date the underlying fact was observed. Confirm any required notice, waiting or cure period and the date full rent resumes. If the right continues until cure, define what counts as cure and how it is evidenced. If the remedy expires after a maximum period, keep the termination or other election window separately controlled.
Build the current rent path with its own base-rent and additional-rent escalation cadence. A five-year base-rent step should not be converted to an annual increase, and an annual additional-rent assumption should not silently change base rent. Place each component and remedy on a monthly timeline before calculating nominal or present-value differences.
Closing the store and stopping rent are different decisions
Review continuous-operation wording, required hours, active-operation standards, abandonment, default, recapture, restoration, insurance, security, percentage-rent, co-tenancy, radius and reopening consequences. A lease may prohibit closure, permit it, allow defined exceptions or remain uncertain after initial review. The operating decision should not be inferred from the rent scenario.
For the business case, enter lost gross margin rather than gross sales when possible, avoided payroll and operating costs, inventory and logistics effects, security, utilities, decommissioning, signage, restoration, one-time closure and reopening costs. Keep rent that continues as a separate percentage of the reviewed rent path. Document assumptions and test different closure durations.
Treat termination as a separate reviewed right and dated process
A termination opportunity can depend on a condition continuing for a stated period, timely notice, tenant compliance, payment of full or alternative rent, surrender obligations and an effective-date formula. Record the entered right status, decision month and planning cost only after the source and facts are reviewed. Use a critical-dates system for the actual notice window and delivery requirements.
Price moving, replacement space, downtime, unamortized improvements, restoration, professional fees, employee and inventory transition, settlement and security release separately. The lease may also require continued performance through the effective date. A favourable rent difference does not establish that termination is the better operational decision.
Nominal rent savings are only one line in the decision
Compare current-path rent, reviewed-path rent, nominal difference and present-value difference. Then add the entered operational impact and one-time termination or reopening cost. Review the monthly schedule to see whether the economic benefit occurs before or after major business costs. Do not add overlapping alternatives into one benefit figure.
A scenario can be useful while eligibility remains uncertain if it is clearly labelled. Present at least the current contract path, the entered alternative-rent path and any closure path. Identify which inputs are sourced, verified, assumed or disputed. Preserve the issue queue beside the money so a decision-maker cannot mistake a calculation for an entitlement.
Move the reviewed decision into administration, notices and finance
Export the monthly schedule, decision brief, issue queue and portable working file before approval. Retain executed leases, amendments, occupancy schedules, notices, legal advice and signed decisions in the organization’s controlled repository. The browser workspace is device-local and is not a document vault.
After authorization, carry the approved rent treatment into billing, accruals, forecasts and rent-invoice review. Carry each notice, cure and election deadline into Critical Dates. Carry continuing operating and evidence duties into Lease Obligations. Reopen the record when an anchor returns, a replacement opens, occupancy changes, the centre is reconfigured or a remedy period ends.
Frequently asked questions
What is alternative rent in a retail co-tenancy clause?+
It is a lease-defined payment structure that may apply if specified conditions and procedures are satisfied. It can be fixed, percentage-based, flat, lesser-of or another formula and may preserve other rent components.
Can I stop paying rent when an anchor closes?+
Do not assume so. Review the complete co-tenancy condition, replacement language, occupancy test, duration, notice, cure, eligibility, remedy and continuing charges with qualified counsel before acting.
Does additional rent usually continue during alternative rent?+
There is no safe universal assumption. The workbench lets you keep or remove additional rent as an explicit entered scenario choice so the actual clause can be modelled component by component.
What is a go-dark right?+
It is a shorthand description for whether a tenant may cease active operations while the lease continues. The actual position depends on continuous-operation, hours, default, recapture, rent and related provisions and applicable law.
Should closure economics use lost sales?+
Gross sales can overstate the business loss because operating costs may be avoided. Use an internally consistent gross-margin or contribution measure where appropriate, then add avoided costs and one-time closure or reopening amounts separately.
Can the tool calculate a legal cure or notice deadline?+
No. It accepts entered months and days for planning and flags open review. The actual trigger, counting rule, permitted method, receipt, cure and election require the complete documents, facts and qualified legal review.
Where the factual guidance comes from
These links support narrow factual points in this guide. They do not replace review of the proposal, executed lease or advice for the actual transaction.
Competition Bureau Canada — Competitor property controls and the Competition Act ↗Official current enforcement guidance relevant to retail exclusivity and restrictive covenants. It does not decide a private lease remedy or approve a particular control.Justice Laws Website — Competition Act ↗Official consolidated federal legislation. Review the current version and obtain qualified advice for the actual agreement and market facts.Canada Revenue Agency — GST/HST memorandum 19.4.1, Commercial Real Property — Sales and Rentals ↗Official federal tax guidance addressing commercial real-property sales and rentals. It supports tax review context but does not establish the entered rate, invoice treatment or lease entitlement.Ontario — Renting commercial property in Ontario ↗Official provincial commercial-leasing overview. It reinforces the importance of the signed agreement and legal advice but does not prescribe alternative-rent or go-dark formulas.Office of the Privacy Commissioner of Canada — PIPEDA requirements in brief ↗Official federal privacy overview relevant when retail evidence contains contacts, sales, financial or other personal information. Confirm which privacy regime applies.This guide is general educational information and financial-workflow support. It is not legal, tax, accounting, engineering, environmental, appraisal or brokerage advice. Verify source documents and obtain appropriate professional advice before acting.