Comparing Value: U.S. Government Office Leases vs. Credit Tenant Leases

  • April 22, 2013
  • • Written by: Donald Sonneman, ASA David J. Yerke, MAI, SGA 

Spring 2013, Vol. 38, No. 1

Abstract: Investors often are called upon to value a leased fee interest in a single tenant property. Th e purpose of this article is to evaluate whether single tenant, federal government agency leases, are credit tenant leases. To make that evaluation, this article addresses the following areas: 1) discussion of the historical credit tenant status for single tenant federal government office leases; 2) examination of whether credit status is appropriate given the current financial pressures on the U.S. government; 3) consideration of important differences in government lease clauses and lease clauses for private sector leases; and, 4) attempt to quantify the scale of economic differences between U.S. government leases and private sector credit tenant leases.