The guarantee on this medical lease is from an entity I can't find any financials for

Imaging tenant means floor loading, shielding, and dedicated power. If they ever leave, that suite is expensive to make generic again. I pulled lead shielding out of an old radiology suite once and the disposal alone surprised me. Ask for the original build out drawings.

warrant, plain question, does the guaranty actually say the guarantor is liable for the full remaining term, or is it capped at some number of months of rent? I've read two of these and they were both capped at twelve months. If yours is capped, the identity of the guarantor matters less than you think because the exposure is bounded either way.

I'd slow down on the closing condition idea. Asking a health system affiliate to swap in a parent guaranty mid-term with nothing offered in return is a request they'll ignore, and you've spent goodwill you might want later on a renewal. If you want the parent on the hook, the trade is usually something they want, extra term, a small rent concession, an expansion right. Otherwise price it and move on.

The affiliate structure isn't automatically a red flag. Systems put outpatient operations in separate entities for a lot of ordinary reasons. What matters is whether the operating business inside that entity has revenue that covers rent. Physical therapy and imaging under a system brand usually has referral flow from the system, which is worth more than the paper.

Can you ask for a rent to revenue ratio instead of full financials? Some tenants will give a coverage number without opening the books.

I'm new and had to look up half of this, so a question for anyone: what does "base year" actually mean here in practice? My understanding is the landlord pays operating expenses at the level they were in the first year and the tenant only pays increases after that. If the base year is set from a year when the building was half empty, doesn't the landlord get stuck with an artificially low base forever?

@juniper yes, that's the gross up issue and it bites people. A well drafted lease says operating expenses are grossed up to 95% occupancy for the base year calculation, so the base reflects a full building. If that gross up language isn't in this lease, warrant, the low base travels with you for six years. That's a specific clause to search for right now.

sable's point is the one I'd chase before the guaranty. A bad base year is a certain loss every single year. A weak guarantor is a possible loss once.

On the discount question. I don't think there's a clean spread you can quote. What I've watched happen is that unguaranteed practice credit gets underwritten on renewal probability rather than on credit at all. So the questions become: how long has this practice been in this suite, how much of their build out did they pay for, how far are their patients traveling. A group that spent $400k of its own money on an imaging suite eight years ago is not moving over $2/sf. That's worth more than a guaranty from a shell.

Your lender is going to have an opinion on this before you do. If the suite is 38% of income and the guarantor is unrated with no financials, expect the loan sizing to treat it as local credit and expect a question about lease term versus loan term. Six years of lease against a five year loan with a balloon is a conversation. Get the term sheet language in writing rather than assuming.

Nobody has said the obvious one so I will. Rent at $35.83/sf, is that market? Pull three medical comps in that submarket. If the space is 15% over market, the guaranty question is moot because at renewal you're rolling down regardless of who signed what. If it's under market, you have cushion and I'd stop losing sleep over the LLC.