Does anyone actually price the difference between a co-tenancy clause and an anchor kick-out clause when they're underwriting a strip?

Binary treatment is the right instinct to question. The clause chain you're describing creates a conditional probability problem, and a binary model compresses two separate risk events into one, which obscures where the real exposure sits.

The assumption doing the most work in most strip underwriting is that co-tenancy trigger and inline departure happen on the same timeline. They don't. You have at least three distinct periods: the anchor dark period itself (which may not trigger co-tenancy immediately depending on how "dark" is defined in your specific lease), the 18-month clock before kick-out rights vest, and the period after kick-out vests where tenants have the right but may not exercise it. Each has a different probability and a different cash-flow consequence.

One way to structure this more honestly is a decision tree with weighted scenarios rather than a binary. Three nodes: anchor goes dark, how many inlines actually trigger percentage rent (not all three may qualify simultaneously depending on drafting), and of those that qualify, how many exercise kick-out at month 18 versus staying on reduced rent. Each branch gets a probability and a corresponding NOI. The weighted average of those NOIs is a more defensible underwriting position than a single stressed or unstressed case.

The risk you haven't mentioned is the definition of "dark" in that co-tenancy clause. Some clauses trigger on lease termination, some on physical closure, some on a combination with a cure period. If the grocer goes to a skeleton-hours format or sublicenses to a smaller operator, you may not trigger co-tenancy at all, which sounds like upside but also means your downside scenario is harder to force into a neat model. That clause language is the document that matters most right now, and a real estate attorney needs to read it before your probability estimates mean anything.

What does your current percentage-rent floor look like for the three inlines if co-tenancy triggers, and have you modeled the re-tenanting cost and timeline if all three exercise kick-out?

Your instinct about the binary is right. The actual risk lives in the gap between "anchor goes dark" and "inline tenant exercises kick-out," and the size of that gap depends on a few things your spreadsheet probably cannot generate on its own.

Here is how I have seen people approach it more honestly than a single yes/no toggle.

Build a three-scenario sleeve instead of a single event.

Scenario one: anchor wobbles but stays. Co-tenancy drops three inlines to percentage rent, so model those three at something like 4 to 6 percent of gross sales rather than their base rent. For a 9,400 sf center, you need their sales-per-square-foot numbers to anchor that estimate. If you do not have them, ask for historical sales reports in due diligence. Tenants on percentage-rent clauses often have reporting obligations.

Scenario two: anchor goes dark, inlines ride it out past month 18. This is more common than people expect when a tenant is operationally profitable but the anchor lease just terminates. Model the co-tenancy period at full duration before kick-outs fire.

Scenario three: two inlines exercise kick-out at month 18. Now you have lost anchor rent plus two inline tenants, and you are carrying a center with significant vacancy during a re-leasing period. Model re-leasing at 12 to 24 months and at a lower rate than current in-place rent, because your negotiating leverage shrinks with vacancy.

Weight those three scenarios by probability and blend the NOI. Net operating income is your annual income after operating expenses, before debt payments. Even rough weights (50/30/20) give you a more defensible number than a binary.

The thing worth confirming with your attorney: whether the co-tenancy clause defines "dark" as lease termination or as physical closure. Some anchors stop operating but keep paying rent, which changes the co-tenancy trigger entirely.

What sales data do you have on those three inline tenants so far?