As far as the terms of the lease, here’s what we know so far: Related plans to give Hollywood up to $35 million upfront, a mix of cash and public improvements.
The developer has proposed paying Hollywood the same $400,000 in annual rent for the entire 99 years of the lease — a proposal experts say is unusual because it lacks the traditional bump in rent based on benchmark interest rates. The city also would collect 30% in gross revenues from the restaurant as “participation rent.”
The payments would equal $40 million in base rent and another $44 million in participation rent over the life of the 99-year lease, assuming a 3% annual increase in participation rent, Hollywood spokeswoman Raelin Storey said.
But those numbers don’t account for inflation, says Adam Von Romer, a senior investment associate with the Fort Lauderdale-based real estate firm Fitzgerald Group.
“It could potentially be a great deal for Hollywood,” he said. “But the numbers have to be right.”
You can’t use simple arithmetic to figure the value of the lease, Von Romer said.
Over 99 years, the $400,000 base rent payment would be the equivalent of $3,193.89, he said. The lease would be worth just short of $8 million in cash today.
Storey says the terms of the lease are not final and still subject to negotiation. But Levy said he thought the developer planned to pay escalated rent. When told otherwise, he said he planned to request accelerated payments to keep pace with inflation.
“Acceleration of rent is something I am certainly going to look for,” Mayor Levy said.
Steven Naron, who lives next door in the Summit Towers condo, is chairing a neighborhood committee that has been working with the developer to address concerns on everything from dune preservation to construction noise and traffic.