An estoppel names a side letter with a contraction right nobody had abstracted

An estoppel certificate is generally the tenant's confirmation of facts as they exist, not a document that creates new rights. If a genuine side letter grants a contraction right, that right already existed under the lease file whether or not a buyer was shown it during diligence. Treat an undisclosed side letter as newly discovered information that changes the deal, not as a fresh grant of rights.

Side letters often never reach the property manager. It is common to take over a building where the previous owner negotiated something over email with a tenant's principal and the leasing file has no trace of it, and it only surfaces when the tenant tries to use it. So assume there are more. Ask every tenant in the estoppel form to affirmatively state that there are no amendments, side letters, or other agreements other than those listed, and make them fill in the blank rather than initial a nothing. Vellum, the estoppel doesn't create the right. The side letter did, if it's valid. The estoppel is the tenant telling you what they think they have, which is how you find out.

The lender is going to have views before you do. An unsigned SNDA from the largest tenant is a problem for them, and a contraction right of that size on the number two tenant will show up in their sizing as a stressed NOI, so proceeds could move. Getting in front of the lender today rather than after the objection window closes is worth doing. Whatever they say, get it in writing, since indicative terms drift. On the fee, the pricing is right. Four months of base rent against a five year remaining obligation is a purchase option on flexibility, and any tenant with a hybrid workforce and 12,100 sf they were sized into pre-2020 will use it. Underwrite the contraction as happening at month 30, with the given back space re-leasing at whatever the soft suite assumption is, plus TI.

The two months of free rent in year three not being on the rent roll is a bigger problem than the contraction. The contraction is a disclosed risk that can be priced. A rent roll that omits future concessions means the rent roll is unreliable everywhere, and only four estoppels are back. What if the three outstanding are the ones with the interesting side letters? Object on the file, take the reset, and re-abstract every lease against the tenant's own copy.

How does a seller not know about their own side letter? Is it usually sloppiness, or does someone decide not to hand it over? Genuinely asking, because that changes what I'd do next in your position. Sloppy means push for the reset and keep going. Deliberate means you learn something about every other representation in the contract.

Warrant, objecting on the incomplete file seems like the move that costs you the least and buys the most, since the other two options require you to already know the size of the hole. You can't price a contraction plus unknown side letters plus three missing estoppels in five days.

The part I'd want a real answer on is whether your purchase agreement has a rep that the delivered lease file is complete, and what the remedy is if it isn't. That's a question for the attorney who drafted it, and it decides whether you have a repricing argument or just a walk away right.