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Not for Sale

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CHAPTER 2 Anatomy of a Lease While a lease is often considered a complex and daunting document by the legal and real estate neophyte, it can be easily understood and digested if the individual components that comprise the whole are broken down and examined in detail. Every lease, regardless of type, is comprised of essen- tially the same core elements; understanding the individual components of a lease will provide the necessary building blocks needed to construct and execute a successful airport lease agreement. The first section will address the basic types of leases at an airport and the core elements included in each. The type of airport lease applicable to each agreement will vary based upon the tenant and anticipated use of the land or facility (i.e., private versus commercial venture). These general lease types can be broken down into the following broad categories: Aeronautical versus nonaeronautical leases, Land leases, Fixed-base operator (FBO) leases, Specialized aeronautical service operator (SASO) leases, Hangar rental leases, Subleases, and Airline leases. Subsequent sections in this chapter will list and detail the core and optional lease elements that comprise a complete lease agreement. How these elements fit into the overall lease, the key con- siderations of each, and their potential impact on the airport sponsor and tenant are examined. 2.1 Airport Lease Types There are various lease agreements, each with unique characteristics, which are in effect at any given airport. The variance between lease structures is dependent upon the type of tenant (i.e., commercial versus private individual), the location of the leasehold (i.e., airside versus landside), and the type of activity to take place within the leasehold. The structure of the lease, as indicated by the lease elements included in the agreement (discussed later in this chapter), should always reflect the activity, tenant type, and location of the leasehold in order to protect the financial, development, and regulatory needs of the airport. The following sections will present an overview of the characteristics of differing lease types, and the considerations an airport sponsor should take into account before executing a lease agreement. 2.1.1 Aeronautical Versus Nonaeronautical Many airports have aeronautical, or aviation-related tenants, users, and lessees, and nonaero- nautical tenants who lease property from the airport but do not necessarily depend on, nor 10