Items 1.01 Entry into a Material Definitive Agreement
On July 23, 2020, Cedar-Senator Square, LLC, a Delaware limited liability company and wholly-owned subsidiary of Cedar Realty Trust Partnership, L.P., the operating partnership of Cedar Realty Trust, Inc. (the “Company”), entered into a commercial lease agreement (the “Lease”) with the Government of the District of Columbia (“District”), for the lease by the District of approximately 240,000 square feet of office space in a new 6-story building to be constructed by the Company at 3924 Minnesota Avenue NE, Washington, DC (the “Premises”). The building is planned to house the new office headquarters for the District of Columbia’s Department of General Services’ (“DGS”) 700-member workforce. The term of the Lease is 20 years and 10 months, to commence upon substantial completion and delivery to DGS of the Premises along with related parking, including all permits and approvals required from governmental authorities for occupancy and use, as detailed more fully in the Lease (the “Term”). The Company anticipates commencement of construction to occur in the first quarter of 2021 and currently estimates that the Premises will be delivered during the end of the fourth quarter 2022.
Upon completion of the building, the District will be obligated to pay initial annual net rent of approximately $5.4 million per year, subject to a 2.5% annual escalator on each anniversary of rent commencement, plus certain operating costs, property taxes and amortization of tenant improvements together totaling approximately an additional $8.1 million per year, for an aggregate total annual rent of approximately $13.5 million. The Lease provides for a free rent period of 10 months immediately following rent commencement. The Lease also provides the District with a tenant credit of approximately $6.8 million to be applied, at the District’s election, against either annual rent or any other tenant payment obligations including tenant improvement costs, in excess of the tenant improvement allowance. Pursuant to the Lease, the Landlord will contribute up to $155 per rentable square foot of the Premises toward the cost of tenant improvements for the Premises, to be amortized over 240 months. In addition, the Lease provides that the Company will contribute $9.38 per rentable square foot in additional tenant improvement allowance between the 10th and 12th Lease years to refresh the Premises, upon the District’s timely election. The obligations of the District under the Lease are subject to annual budget appropriation.
The foregoing description of the Lease does not purport to be complete and is qualified in its entirety by reference to the actual Lease, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included above under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
