Sixty days free rent to land a corporate master lease looked like a smart concession until the numbers came back
A case worth studying: an operator signs a twelve-month master lease at $3,200 a month with a sixty-day free period upfront to close the deal. The company pays $3,200 for ten months, so $32,000 collected against $38,400 at face. Effective rent is $2,667, which is $533 below the number that made the deal pencil. If the underlying mortgage and operating costs assumed $3,000 net, the concession did not buy occupancy, it bought a loss dressed up as a lease. The sixty days felt like a marketing expense. It was actually a permanent reduction in yield for that lease term, and if the company exercises a renewal at the same face rate, the operator often has no clean moment to claw it back. The assumption doing the most work in free-rent concessions is that the tenant stays long enough for the back months to average out the front. In corporate housing, a six-to-nine month placement that ends at month seven means the free period was never recovered. The question is not whether to offer concessions, it is whether the concession is sized against the minimum term where the math still works, and whether the lease actually locks that minimum in with a real remedy. A sixty-day free period on a twelve-month lease with a thirty-day out clause is not a concession, it is a subsidy with no floor. What minimum term would make the free-rent math acceptable to you before you sign, and does your current lease form let you enforce it?
