This NNN lease has a roof and structure carve-out, a CAM cap, and a right of first refusal. Which of those do I fix in the PSA?

Price items 1, 2 and 4, walk on 5 unless the tenant will waive it in the estoppel. That last part is not hypothetical, tenants waive ROFRs all the time in exchange for something small like a modest cap on a future CAM item or a letter confirming their signage rights. Ask the seller to request the waiver as a condition of your going hard. If the tenant refuses, you've learned that the tenant is thinking about buying, which tells you something about your future exit and about their view of the rent. On the roof, don't take a contractor's range, get a roof consultant to core it in two places. Coring tells you whether it's one layer or two, and that's the difference between your $290,000 and something worse.

So here's my basic question. A right of first refusal means if you get an offer from someone else, the tenant can step in and buy at that price instead. Why does that hurt you? I would have assumed it just adds a possible buyer... but I think I see it. Nobody wants to spend money on inspections and lawyers to write a real offer when a tenant can take the deal away at the last minute, so you get fewer bidders and softer prices. Is that the whole problem, or is there more to it?

compass, that's most of it. The rest is timing. A 30 day window sits on top of your closing timeline and your buyer's financing clock, so institutional buyers with committee dates just skip listings that carry one.

On the underwriting: your 6.9 percent isn't 6.9. Take the roof at $360,000 as a midpoint and spread it over the 6 years of remaining term, that's $60,000 a year against $231,000 of NOI, so you're at a 5.1 cap on a realistic basis. Add $8,000 a year for four rooftop units you'll probably own and it's worse. Either the price comes down by the roof, minus whatever discount you'll accept for spending it in year four rather than day one, or the seller replaces the roof before closing with the work bonded and warrantied in your name.

The CAM cap I'd model as a $15,000 to $25,000 annual leak by year five and stop trying to litigate the word controllable. You'll never win that argument with a tenant who has six years of leverage and no reason to renegotiate.

Sextant is right about committee dates, and I'd add that I've seen this play out in listings. I've watched two listings die because of a ROFR that the seller assumed was cosmetic. The other thing a ROFR does is make your lender ask questions, since it complicates a foreclosure sale, and some lenders will want a subordination or an acknowledgment from the tenant. Whether they insist depends on the lender, so ask yours in writing early rather than three weeks in.

Roof numbers first. A 2006 TPO over metal deck with rigid board, tear off and replace, is running me $9 to $12 a foot in my region right now with disposal, and a recover if the deck and insulation are dry is $6 to $7. On 48,000 sf that's $288,000 on the good day and $576,000 on the bad one, so your top end is optimistic. Core it.

The mezzanine is the one everybody ignores. No restoration obligation means when the tenant leaves you own a 3,000 sf steel platform that may or may not have been permitted, may or may not have sprinkler coverage underneath it, and may or may not comply with egress. Removal on a job like that has run me $12 to $18 a foot, and if it was never permitted the fix is a permit application after the fact, which in my experience takes longer than the work. Pull the building permit history for the address, it's usually online, and see if the mezzanine and the racking ever appear. Racking over a certain height also triggers sprinkler requirements in most codes, and the specifics vary by jurisdiction and adopted code year, so ask the fire marshal's office directly.

warrant, one question about how you're framing this. You called the ROFR the thing the seller can't fix, but he can, he just doesn't want to ask the tenant and risk opening a conversation about the building. That's a negotiation problem with a price attached, same as the roof. I'd put a number on it. If the ROFR costs you 25 basis points at exit on a $3.5M sale, that's real money and it's a reason to ask for the waiver hard, in the letter of intent, before anybody spends on reports. Also, everything harrow just said about permits is the kind of thing lenders discover at appraisal and then reprice on, which is a worse moment to find it than now.