NYC Program Operator Lease

Looking at a deal right now where a whole small multi-family is leased to an operator of a program in NYC. Based on the current in place lease and current financing options I would make a high teens cash on cash return. However, The rent the tenant is paying is about 35% more than market because he had the previous landlord modify the building for the specific program use and has a 7 year lease term. the current ask on the property is 25% more than market value for a comparable property with market tenants.The tenant isn't personally guaranteeing the lease which is my only concern and instead has a large 8-month deposit. my only real concern on the deal is that the tenant screws up and the city pulls out and I'm left with the vacant building and 8 months of reserve. Any suggestions in the way to structure the deal to hedge my downside risk. I was going to look for a partner on the deal who does the same program the tenant is doing and secure and agreement with him to monitor operations of the city program and step in if necessary to assume the lease in the event shit hits the fan.

 

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