When a lease runs twelve years but the power arrangement resets at year seven, which term should the hold period anchor to

Plain question so I can follow the rest of this. When you say power is a pass-through, does that mean the tenant pays the utility directly, or does the ownership entity get the bill and rebill it? Those seem like very different exposures if the tenant gets slow paying.

Before voting I'd want to see the actual second-feed paperwork. A study letter isn't capacity. There's a real difference between a position in a queue and an executed interconnection agreement, and sponsors often use the same word for both in the deck. Thicket, does the LP agreement give you any right to see utility correspondence directly, or do you get a quarterly letter and that's it?

The multifamily version of this is a tenant on a two year lease in a building where the boiler has four years left. The lease isn't what gets underwritten, the thing that has to be replaced is. Here the thing that has to be replaced is the electricity contract, and that can't be scheduled on the deal's own timeline. That weighs the analysis toward the power term regardless of how good the credit is.

Seven years of visibility on the input cost of an entire business is more certainty than most operators ever get. Plenty of operations reprice labor every year with far less to lean on.

In markets like this, the utility relationship is the asset and the building is the cheap part. If a load of that size gives up the interconnection at year twelve, someone else takes that position fast, assuming the substation is still adequate. So the shell is not worthless, it is worth whatever the next queue looks like. That is a real number, it is only unknowable today.

The boiler comparison is the one that lands. But it is worth pushing back a little. A boiler can be priced. Nobody can price delivered power in year eight with a straight face, so anchoring to the power term does not actually give a number either, it just gives a shorter hold and a residual that also cannot be priced.

Threads like this tend to end up back in the weeds on substations. If the distribution is stable for seven years and the exit is a coin flip, the better answer is sizing the position so the coin flip doesn't matter, rather than trying to pick the right term.

One thing worth checking that hasn't come up. Look at whether the second feed's route crosses land the ownership entity doesn't control. Power plans have died on an easement across three parcels where one owner simply said no, and the study letter would say nothing about it because easements aren't the utility's problem. If the year-eight case depends on that feed, the easement file is part of the underwriting, and easement recording practice varies by state so check how it's actually documented where this sits.