Legal & ownership
Lease Extension Clause
Contract language that controls how a lease can be extended after expiry; one of the highest-impact lines in leasehold deals.
A lease extension clause defines how a lease can continue after the initial term. For leasehold investors, this can be more important than interior finishes or short-term yield assumptions.
Favorable formats include fixed-price extension formulas or capped market mechanisms. Clauses that only promise renewal at “market price” can surprise both sides—many investors push for language tied to land value only so they are not effectively paying twice for improvements they funded.
Vague “to be discussed later” wording is worse than a crisp formula: negotiate triggers, valuation method, and timelines before you sign.