Scenario Analysis You have closed on the deal as planned on 1/1/2023. In March of 2023, a global pandemic hits and mandated lockdowns shutdown the city. On May 1st, 2023, Tenant #2 (the largest at 80,000) announces bankruptcy. This location is their corporate HQ and they intend to remain there if possible, but per bankruptcy law, the terms of the lease could be change and potentially canceled. The tenants legal approaches you with two options they believe the federal judge and creditors would accept. A. Option A You can accept the following terms for the tenant to keep all 80,000 SF: - New Rent $22 psf until 12/31/2028, starting 6/1/2023 - Rent increase up of 10% in psf rent starting 1/1/2029 until the end of the original term B. Option B The original lease terms stay in place until 12/31/2023, at that point the tenant surrenders 40,000 SF (you can now lease this space if a new tenant is found) and will keep 40,000 SF at the following terms: - New Rent $26 psf until 12/31/2028, starting 1/1/2024 - Annual rent increases of 3% psf starting 1/1/2029 until the end of the original term Question, what do you recommend your firm does? Support with models, math, etc. Make extra assumptions (like on when and for how much the vacant space leases, if chosen) where needed.