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How to Calculate Remaining Guarantee on a Lease

Learn how to calculate the remaining guarantee on a lease with a step-by-step guide, using Milk and Honey in Fairfax as an example.

By Joe Lawler

In this guide, we'll learn how to calculate the remaining guarantee on a lease by examining the lease document and identifying key details. Using Milk and Honey in Fairfax as an example, we'll navigate through the lease to find the guarantee terms and determine the commencement date. We'll then calculate the remaining guarantee by reviewing the budget for 2025, focusing on rent, CAM, and real estate taxes. This process involves understanding the lease's legal language and using tools like Microsoft Excel to organize and compute the necessary figures.

Let's get started

To calculate the remaining guarantee on a lease, first open the lease. For example, consider Milk and Honey in Fairfax at the Turnpike Shopping Center

The guarantee is typically included as one of the exhibits in the lease and is found later in the document. In this instance is starts on page 65 of 69.

Much of the information contained in the guaranty is legal language establishing the relevant entities and their liabilities.

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Step #1:

Scroll within the guaranty to find the paragraph beginning with "Notwithstanding." Here, you'll see that at any time during the first three years of the original term, the guarantee equals 12 full calendar months of rent due (rent includes, CAM, Insurance and Taxes for the calculation) plus associated costs (attorney's fees) .

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Find the paragraph beginning with "Notwithstanding" toward the end of the Guaranty
Step #2: Find the paragraph beginning with "Notwithstanding" toward the end of the Guaranty

Now we need to determine the Rent Commencement Date by scrolling back to the top of the document:

Often times you'll need the "Effective Date" to determine the "Rent Commencement Date" which serves as the trigger for the guaranty calculation. In some leases, there's a certificate included as an exhibit to the lease that explicitly states the rent commencement. In this instance it's defined as a calculation and has a number of factors that need to considered including delivery, permits and the date the unit opened for business.

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Determining Rent Commencement Date
Step #3: Determining Rent Commencement Date

For the purposes of the SOP, we'll use LeaseQuery as our source of truth for the Rent Commencement Date. Our 3rd party Lease Administration Partner (REBO) has verified these dates with the Landlords.

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Step #4:
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Review the P&L or Annual Budget to Determine the Rent Amount for the Guaranty Calc
Step #5: Review the P&L or Annual Budget to Determine the Rent Amount for the Guaranty Calc

Here, you can see the rent period by period for Milk and Honey Fairfax.

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Consider Rent + CAM + Real Estate Taxes
Step #6: Consider Rent + CAM + Real Estate Taxes

The total rent due for the year is $112,500, plus CAM charges of $15,882.96, and real estate taxes of $11,541.96 for a grand total of $139,924.92 for the guaranty amount.

How to Calculate Remaining Guarantee on a Lease