This resolution approves a change to the lease agreement with DFS Group for duty-free and luxury stores at the airport, allowing for reduced rent until the end of 2023 if they complete construction in designated terminals by specified deadlines. The overall lease term remains unchanged, lasting until March 31, 2034.
Resolution approving Amendment No. 5 to the International Terminal Duty Free and Luxury Store Lease No. 17-0303 between DFS Group, L.P. and the City and County of San Francisco, acting by and through its Airport Commission, modifying the reduced rent structure from May 1, 2023, through December 31, 2023, contingent upon Tenant’s construction of its location in Harvey Milk Terminal 1 by December 31, 2024, and its other location in Terminal 2 by March 31, 2025, with no change to the 14-year term of April 1, 2020, through March 31, 2034, to be effective upon approval of this Resolution by the Board of Supervisors.
How it got here
The legislation originated from the need to amend the lease agreement for the International Terminal Duty Free and Luxury Stores due to ongoing financial challenges faced by the tenant, DFS Group, L.P., exacerbated by the COVID-19 pandemic.
The Airport Commission awarded the International Terminal Duty Free and Luxury Stores Lease No. 17-0303 to DFS Group, L.P.
The Board of Supervisors approved the lease under Charter §9.118.
The Commission approved Amendment No. 1 to lower the Base Rent to 33% of gross revenues for Lease Year 1 due to COVID-19 impacts.
The Board approved Amendment No. 1, which was necessary due to the pandemic's impact on sales.
The Commission adopted the COVID-19 Emergency Rent Relief Program, which included provisions for rent relief for tenants.
The Commission approved Amendment No. 4, which provided for a temporary reduction in Percentage Rent and Minimum Annual Guarantee contingent upon construction deadlines.
The Commission approved Amendment No. 5, which modified the rent structure for the period May 1, 2023, through December 31, 2023, contingent upon construction deadlines.
The Board of Supervisors adopted Amendment No. 5, finalizing the modifications to the lease agreement.
Reconstructed from attached documents & the official record
