This resolution approves a temporary reduction in rent for the International Terminal Duty Free and Luxury Store lease, lowering the percentage rent to 28% for revenues up to $100 million and 32% for revenues above that, along with a minimum annual guarantee of $25 million for 2026. These changes will apply for Lease Years 7 through 10, from 2026 to 2029.
Resolution approving Amendment No. 6 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, temporarily reducing Percentage Rent to 28% of Gross Revenues up to $100,000,000 and 32% for Gross Revenues above $100,000,000 for Lease Years 7, 8, 9, and 10 (Lease Years 2026 through 2029), and a temporary reduction in the Minimum Annual Guarantee (MAG) for the same period by establishing the MAG at $25,000,000 for 2026 (Lease Year 7), with annual adjustments as provided in the Lease, effective upon approval by the Board of Supervisors.
How it got here
The legislation originated from a need to provide financial relief to DFS Group, L.P. due to ongoing losses exacerbated by the COVID-19 pandemic and changing demographics of international travelers.
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 agreement under Charter §9.118.
The Commission approved Amendment No. 1 to temporarily reduce the Base Rent to 33% of gross revenues for Lease Year 1 due to the pandemic.
The Commission adopted the COVID-19 Emergency Rent Relief Program, providing MAG rent relief for April and May 2020.
The Commission approved Amendment No. 4, which provided for temporary reductions in Percentage Rent and MAG for Lease Years 5, 6, and 7.
The Commission approved Amendment No. 6, which temporarily reduces Percentage Rent and MAG for Lease Years 7 through 10.
The Board of Supervisors adopted the resolution approving Amendment No. 6, finalizing the temporary rent reductions.
Reconstructed from attached documents & the official record
