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Shopping Center Investments under Tenant Incentive Contracting

Author

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  • Peter Liu

Abstract

Investment decisions made under uncertain conditions are among the most critical considerations for corporations. The significance of financial constraints in a firm's investment choices has been emphasized by the recent financial crisis. In this study, we focus on modeling a typical shopping center that includes both anchor tenants and in-line or mall tenants. To ensure alignment of interests with the tenants, the center owner usually employs a percentage lease contract. However, in-line tenants necessitate a co-tenancy clause that stipulates the payment of no rent if the anchor departs from the center. Our model is calibrated using a sample of shopping center leases.

Suggested Citation

  • Peter Liu, 2023. "Shopping Center Investments under Tenant Incentive Contracting," ERES eres2023_296, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_296
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    More about this item

    Keywords

    co-tenancy; financial constraints; Investment Under Uncertainty; retail leases;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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