Tenant Improvements rolled into rent - how to structure?
I have a strong regional tenant with 8 locations interested in moving into a property I recently purchase. The location is currently vacant with no utilities and has not been occupied for 5+ years. 

I proposed that I would provide: 
roof repairs, new electric service brought to a new panel, new water and sewer connections stubbed to the building, two hvac units (but no ductwork).  Basically a warm shell. 

To deliver it in this condition, I proposed $30 psft plus CAM, 10 year initial term (with some escalations) and two extension options. 

They want to do around $750,000 in tenant improvements and asked how much I would cover.  

In the past, I’ve agreed to pay half of the fitout and added it (plus modest interest) to the rent amortized over the initial term. 

Any other suggestions on how to approach these expenses?  Assume good tenant credit. 

Thanks for any advice!
[{"id": "ie827mf", "text": "The plan you have sounds pretty good, really interested to see what others say.", "replies": [], "depth": 1}, {"id": "ie88doo", "text": "Interesting approach from the tenant asking how much the LL would cover for these expenses.\n\nIt sounds to me that the tenant wants to perform this work regardless if the LL would pay something or not.\n\nIf I were in your shoes I would look at this deal purely from a math/investment perspective:\n\n\\- calculate the NER for different scenarios/assumptions\n\n\\- if you are to provide a TI, instead of providing a lump sump once the construction is completed maybe you can provide a credit throughout the term of the lease. This will minimize the risk for you in case the tenant goes bankrupt\n\n\\- some other considerations : ask for financials, good security deposit, maybe a personal guarantor \n\n&amp;#x200B;\n\nThese are just some thoughts without knowing the full details...", "replies": [], "depth": 1}, {"id": "ie89ze5", "text": "Regarding the escalations, you might want to include a floor and ceiling based on the CPI. Inflation can really eat away at your profits, might be wise to squeeze in a 3% minimum up to a 5-6% maximum.", "replies": [], "depth": 1}, {"id": "ie8klww", "text": "Considerations:   how much $ do you have liquid;  What improvements are they asking for and are the specific to their business;  do the the imprvoments enhance the building and can be in place for future tenants.\n\n&amp;#x200B;\n\nIf there are any tenant-specific improvements, consider requiring them to remove them when they vacate.", "replies": [{"id": "ie8s72i", "text": "Liquidity isn\u2019t an issue. I\u2019m trying to align interests and minimize risk.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ie8ynro", "text": "If you confirm the credit worthiness and agree to roll half of the TIs to be repaid over the term (example 120 months). I would recommend considering amortizing the rent with an interest rate. For example 120 months, @ 8%, $375,000 TI would equate to $4,549.78/month over the term of the lease. \n\nHowever, depending on your market you may need to contribute a portion, all or no TI dollars. \n\nExample:\n$100k Landlord allowance \n$200k amortized as additional rent\nTenant pays the remainder of TI above and beyond", "replies": [], "depth": 1}]