A lease signed on 28 May 2026 takes three quarters of a number and never says what you may subtract from it first.
The tenant is Sagimet Biosciences, Inc. The landlord is Hudson Metro Center, LLC. The premises are Suite 1500 on the fifteenth floor of Metro Center Tower at 950 Tower Lane in Foster City, California, 7,204 rentable square feet, and the lease was filed as an exhibit to Sagimet’s 10-Q on 11 August 2026.[1] Section 14.3 is four sentences long:
“If Landlord consents to a Transfer (other than a Change of Control), Tenant shall pay Landlord an amount equal to 75% of any Transfer Premium (defined below). As used herein, “Transfer Premium” means (a) in the case of an assignment, any consideration (including payment for Leasehold Improvements) paid by the assignee for such assignment, and (b) in the case of a sublease, license or other occupancy agreement, for each month of the term of such agreement, the amount by which all rent and other consideration paid by the transferee to Tenant pursuant to such agreement exceeds the Monthly Rent payable by Tenant hereunder with respect to the Contemplated Transfer Space.”
Read it twice and notice what is absent. There is no brokerage commission. No legal fee. No cost of the demountable wall the subtenant wanted moved. No free rent. Nothing comes off the top. The Transfer Premium is gross sublease rent minus Monthly Rent, and 75% of that difference belongs to the landlord on the fifth business day of every month.
So if Sagimet sublets its suite for $5,000 a month more than it pays, and spends $60,000 on a broker and a lawyer to get there, it owes the landlord $3,750 a month from the first month and recovers its $60,000 out of the $1,250 a month it keeps. That takes four years. The sublease probably does not run four years.
A deduction list is the whole clause#
Almost everyone negotiating one of these provisions argues about the percentage. Fifty is the number people expect, and getting a landlord from 50 down to 25 feels like the win. It is the smaller half of the deal. The percentage applies to a number, and the definition of that number decides whether the number exists.
Here is the same Article 14, from the same widely circulated landlord form, in a lease between Cambridge 1030 Mass Ave, LLC and Obsidian Therapeutics, Inc. for 17,805 rentable square feet at 1030 Massachusetts Avenue in Cambridge. The lease was made in May 2017 and surfaced as an exhibit to a Gazelle Parent, Inc. filing on 22 April 2026.[2] Section 14.3 carries the same heading, the same 50%, and then:
“…after deducting the reasonable third party expenses incurred by Tenant for (i) any design and construction costs incurred on account of changes, alterations and improvements to the Premises in connection with the Transfer, (ii) any free base rent and tenant improvement allowances reasonably provided to the Transferee in connection with the Transfer amortized on a straight-line basis over the term of such Transfer, (iii) any brokerage commissions in connection with the Transfer, and (iv) legal fees reasonably incurred in connection with the Transfer (collectively, “Tenant’s Subleasing Costs”).”
Four items, and the sentence that governs all four is “reasonable third party expenses.” The adjective does ordinary work. The noun does more. A third party expense is one paid to somebody else, which means the eight weeks your own real estate director spent walking brokers through the space is not deductible, and neither is time billed by in-house counsel. If your legal department papers the sublease to save money, the saving goes to the landlord at fifty cents on the dollar.
Item (ii) is the one worth slowing down for, because it is the only item that is not a cash expense. Free rent and a subtenant improvement allowance are concessions, not invoices. The clause makes them deductible and then controls the timing: amortized straight-line over the term of the sublease. A tenant who gives a subtenant six months free on a three-year deal does not get to subtract six months of rent in month one. It subtracts one thirty-sixth of it, monthly, for three years, which is the same money spread so that it offsets premium in the months the premium actually arrives.
Two of the four, deleted#
Now the same form again, in a lease dated 3 May 2024 between 90 New Montgomery Partners, a California Limited Partnership, and Ethos Technologies Inc. for space at 90 New Montgomery Street in San Francisco.[3] Section 14.3, same heading, same 50%:
“…after deducting the reasonable expenses incurred by Tenant for (i) any changes, alterations and improvements to the Premises in connection with the Transfer, and (ii) any brokerage commissions in connection with the Transfer (collectively, the “Subleasing Costs”).”
Improvements and commissions. That is all. Free rent is gone, the subtenant improvement allowance is gone, and legal fees are gone, which in a market where the broker takes four to six percent and a sublease consent package runs real money is a meaningful transfer of value. “Third party” has also disappeared, so Ethos’s internal costs are at least arguably in, which cuts the other way, and I would not want to be the one arguing it.
Three leases, one form, three answers: nothing deductible at 75%, four items deductible at 50%, two items deductible at 50%. Nobody breached anything. Each number is what somebody signed.
Twenty-three words, bought in August 2018#
The clearest evidence that this is the negotiated part of the clause is a lease where you can read the provision before and after, with the same landlord on both sides of the change.
On 17 March 2017 HCP Oyster Point III LLC leased 67,185 rentable square feet on the second and third floors of 171 Oyster Point Boulevard, in the project called The Cove at Oyster Point in South San Francisco, to Global Blood Therapeutics, Inc.[4] Section 14.3 took 50% of the Transfer Premium after deduction of:
“(i) any costs of improvements made to the Subject Space in connection with such Transfer, (ii) brokerage commissions paid in connection with such Transfer, and (iii) reasonable legal fees incurred in connection with such Transfer.”
Three items. Note what (i) covers: improvements made to the Subject Space in connection with such Transfer. In connection with the transfer. The laboratory build-out installed in 2017, years before any subtenant existed, was not made in connection with a transfer and does not come off the top at all. Under that sentence a tenant who spends on its own improvements and later sublets hands over half of a premium that exists partly because the space is now built out.
The basic terms of that lease show why the distinction had teeth. Item 5 of the summary sets the Tenant Improvement Allowance at “$140.00 per RSF of the Premises (i.e., $9,405,900.00),” so the landlord was funding most of the build-out at 171 Oyster Point. Anything beyond the allowance came out of the tenant’s pocket, and under the original subpart (i) that overage was unrecoverable against a future Transfer Premium.
Seventeen months later the parties signed a First Amendment, made as of 29 August 2018, moving Global Blood Therapeutics across the project to the whole of 181 Oyster Point Boulevard, about 164,150 square feet.[5] Paragraph 20 of that amendment is headed “Transfer Premiums” and reads, in full:
“Section 14.3 of the Lease is hereby revised to insert at the end of subpart (i) the following: “(which may include the unamortized cost of the Tenant Improvements to the extent paid for by Tenant directly rather than through the Additional TI Allowance)”. In addition, the rent reduction under Section 4.2 of this First Amendment in the first five (5) months following the Substitute Premises Commencement Date shall not be taken into consideration when calculating the Transfer Premium.”
Both halves of a trade, in ninety words.
The tenant got the deduction that the original subpart (i) refused: the unamortized cost of the Tenant Improvements. Not all of it. Only the part the tenant “paid for… directly rather than through the Additional TI Allowance,” so the slice the landlord funded stays out. That is the right line, and it is the kind of line that takes a draft or two to land. If the landlord paid for the build-out, it should not have to buy it back at fifty cents on the dollar out of the premium. If the tenant paid, the tenant should recover the unamortized part before anyone calls the rest profit.
The landlord’s half of the trade is the second sentence, and it is the more interesting one. Global Blood Therapeutics had negotiated five months of reduced rent at the start of the substitute premises term. That abatement lowers the “Rent and Additional Rent payable by Tenant under this Lease” for those five months, which is the subtrahend in the Transfer Premium formula. Lower the number you subtract and the premium goes up. So a tenant who sublet during its own free rent period would, mechanically, show an enormous premium and owe the landlord half of it, for no reason except that the landlord had given it a concession. The amendment closes that by instructing everyone to ignore the reduction when calculating the premium.
Read in isolation that sentence looks like a landlord protection. It is the opposite. It stops the tenant’s own abatement from manufacturing phantom profit. The landlord gave it up because the clause as written would have produced a windfall nobody had bargained for, and windfalls like that tend to get litigated instead of paid.
Deducting a concession you never gave#
One more, from the other end of the chain. On 16 March 2023 Kriya Therapeutics, Inc. subleased 13,165 rentable square feet at 1100 Island Drive, Suite 101, in Redwood City to Talis Biomedical Corporation, under a master lease from Westport Office Park, LLC.[6] Section 8.3 of that sublease splits “Bonus Rent” between sublandlord and subtenant, fifty-fifty, “after payment to Master Landlord of any amount required to be paid under the Master Lease,” which is the right order of operations and is the sort of thing sub-subleases routinely get wrong.
The deduction list is the Cambridge list, with one addition:
“…any free base rent and tenant improvements allowances reasonably provided to the Transferee in connection with the Transfer (provided that such free rent and tenant improvement allowances shall be deducted only to the extent the same is to be credited, applied or payable to such Transferee)…”
The parenthetical answers a question the Cambridge clause leaves open. A free rent deduction is a deduction for money you did not collect, so there is no invoice and no cancelled check to audit. Nothing in the four-item list stops a tenant from writing a sub-sublease at a high face rent with twelve months free, deducting twelve months of rent, and reporting no Bonus Rent while the sub-subtenant quietly pays something closer to the real number. “Only to the extent the same is to be credited, applied or payable” ties the deduction to the concession actually reaching the transferee. One clause, and the easiest way to game the formula is closed.
Payment and receipt, or no premium at all#
There is almost no case law on which costs are deductible.[14] I looked. The federal opinion collections return nothing on the point, and the reason is structural: these are accounting disputes between a landlord and a tenant who both want the sublease to close, so they settle, and when they do not settle they resolve on summary judgment in state trial courts that do not publish. The drafting carries the whole load, which is why the five clauses above are worth more attention than any case.
The closest the law comes is the First Department’s 2011 decision in Goldman Sachs Group, Inc. v. Almah LLC, and it got there through the deduction language.[7] The landlord argued that a related-party assignment and sublease had conferred “value” on the tenant and that 50% of that value was due under article 12.6. The court read the clause as a whole and said no:
“Additionally, article 12.6 indicates that any “consideration” would consist of “sums” that a tenant “receives” and against which the tenant’s expenses can be netted. This language in article 12.6 conveys the parties’ clear intent that only tangible consideration such as cash or notes payable to the tenant could trigger the profit-sharing clause, and that any intangible benefits inuring to the tenant from the assignment and sublease, as the owner posits, in the form of inherent “value” does not suffice.”
The netting mechanism is what told the court the clause was about cash. You cannot subtract a broker’s invoice from a benefit, so the thing being subtracted from must be money. The deduction list, drafted to protect the tenant’s costs, ended up defining the landlord’s entitlement.
The same clause is worth 100% or zero#
Two further decisions are worth holding side by side, because together they mean this clause changes sign depending on which court the tenant ends up in.
In Carma Developers (California), Inc. v. Marathon Development California, Inc., the California Supreme Court in 1992 upheld a clause letting the landlord respond to a notice of proposed sublease by terminating the lease, taking the space back, and releasing it directly to the proposed subtenant at the higher market rent.[8] The lessee got nothing. The court was blunt about the economics:
“As a practical matter, reserving appreciated rental value to the lessor has no effect on alienation of the lessee’s interest.”
And blunter about motive:
“Marathon’s termination of the lease in order to claim for itself appreciated rental value of the premises was expressly permitted by the lease and was clearly within the parties’ reasonable expectations. In our view, such conduct can never violate an implied covenant of good faith and fair dealing.”
Can never. Not “did not here.” So in California, outside bankruptcy, a landlord with a recapture right in the same article does not need to argue about your deduction list at all. It can take 100% of the upside by taking the space. Sagimet’s lease has exactly that structure: Section 14.4 lets the landlord terminate as to the Contemplated Transfer Space by notifying the tenant within 30 days of the Transfer Notice. The 75% in 14.3 is the landlord’s second-best outcome.
Now file a chapter 11 petition and the clause is worth nothing. In In re Jamesway Corp., Judge Garrity held in September 1996 that a profit sharing provision is unenforceable against a debtor in possession under 11 U.S.C. section 365(f)(1), and refused to read in a safe harbor for reasonable percentages:[9]
“Rather, lease provisions conditioning a debtor-in-possession’s right to assignment upon the payment of some portion of the “profit” realized upon such assignment are routinely invalidated under § 365(f)(1).”
“The Landlords cannot, by artful drafting, thwart the fundamental bankruptcy policy allowing a debtor to realize maximum value from its assigned leases for the benefit of its estate and creditors.”
The clause in Jamesway was a 1990s retail version of the ones above, and the opinion reproduces it: 50% of “profits” rising to 60%, with deductions for “brokerage fees, reasonable attorneys’ fees and costs to prepare the demised premises for such assignee or sublessee” and for amounts paid for the tenant’s fixtures. A careful list, drafted by somebody who had thought about it, and it made no difference. The Ninth Circuit’s bankruptcy appellate panel had reached the same place in 1991 in In re Standor Jewelers West, Inc., striking a demand for 75% of the appreciated leasehold value.[10]
The outlier is the oldest one, and it is a drafting loss rather than a preemption loss. In In re National Sugar Refining Co. in 1982 the landlord’s recapture provision was written as a condition of the landlord’s consent, and the court held it therefore reached only consensual assignments and gave the landlord no claim at all on a section 365(f) assignment.[11] The lesson there is narrower and more useful: how you hang the provision matters, and hanging everything off “as a condition to Landlord’s consent” is a habit worth examining, since four of the five modern clauses quoted above open that way.
For most tenants the premium is zero#
Here is the part that makes all of this less dramatic than it sounds, and a bit more annoying.
There is usually no premium. Cushman & Wakefield’s Q2 2026 U.S. office MarketBeat reports vacant sublease space down 15.4% year over year to 95.6 million square feet, 28% below the Q1 2024 peak and back to early 2021 levels, now 1.8% of total U.S. office inventory.[12] The glut is draining. But sublease space still clears at a discount: Newmark’s second quarter 2026 San Francisco report has sublease asking rent falling to $52.34 per square foot while direct rents rose more than 3%, with the spread “wider than at any point since the start of the pandemic,” against a direct class A label of $77.89 on the same page.[13] A tenant subletting at $52 out of a lease signed at $70 has no Transfer Premium under any of the five definitions above, and no deduction list can create one.
Which produces the asymmetry worth naming. The tenant absorbs 100% of a sublease loss and keeps 25% to 50% of a sublease gain. That is the bargain, and it is not unfair on its own terms, because the landlord did not get a share of the tenant’s rent savings either. What is less defensible is the fixed cost that lands whether or not a premium exists. Sagimet pays Hudson $1,500 for the privilege of having a Transfer Notice read, “whether or not Landlord consents to it.” Section 14.5 lets the landlord demand “a complete statement, certified by an independent CPA or Tenant’s chief financial officer, setting forth in detail the computation of any Transfer Premium.” A CFO certificate on a computation that comes to zero is still a CFO certificate, and somebody has to build the schedule behind it.
One more line in that lease is worth noticing, since it cuts against the whole structure. Section 14.5 also provides that the tenant shall not enter into “any sublease, license or other occupancy agreement that provides for payment based in whole or in part on the net income or profit of the subtenant.” That is the standard real estate investment trust protection: rent measured by a tenant’s net income is excluded from rents from real property under the REIT income tests, so one percentage-of-profit sublease in a portfolio can threaten a landlord’s qualification. The landlord forbids the tenant from taking a share of its subtenant’s profit, in the same section where it takes 75% of the tenant’s.
What does your transfer clause let you deduct?#
If you cannot answer that question for every lease in your portfolio in an afternoon, the answer is in five different places in five different forms, and the one that matters is subpart (i).
Acrebase is built for this. It reads your executed leases and pulls the transfer provisions into one view: the percentage, the deduction list item by item, whether “third party” appears, whether free rent is in and how it amortizes, whether unamortized original build-out made the cut, and whether a recapture right sits in the next section waiting to make the whole calculation moot. When your team drafts the next one, the approved clause library supplies the deduction list your counsel signed off on rather than the one in whatever form the other side sent over, and the playbook carries the fallbacks in the order you actually trade them. Its AI reads how your earlier negotiations went, so when a landlord’s form arrives with no deduction list at all, the flag comes with the four items your team got last time and the concession you gave to get them. Related clauses we have covered: a recapture clause after you spend on the space, an assignment clause lets your landlord decide who buys your business, and who keeps the letter of credit when the lease gets rejected?.
If you are a landlord, decide which outcome you actually want before you draft, because 14.3 and 14.4 are alternatives and only one of them can be your best case. If the asset is one you would happily take back and release, the recapture right is worth more than any percentage, and Carma says in California you may exercise it for exactly that reason and say so out loud. If you want the premium instead, then write the deduction list rather than leaving it out, because Sagimet’s version with no deductions is the version a tenant will fight, will not pay without a schedule, and will ask to amend the first time it has a real subtenant. Include Talis’s parenthetical tying free rent to what reaches the transferee; it costs one line and it closes the only easy way to zero out the number. Keep “third party” in. And accept that none of it survives a chapter 11 filing, so do not price the clause as though it were collateral.
If you are a tenant, three things. First, trade percentage for deductions, not the other way around: moving 50% to 40% is worth less than adding free rent, legal fees and the unamortized cost of improvements you paid for yourself, and the Oyster Point amendment shows a landlord agreeing to the last of those in writing, so it is askable. Second, check what the clause subtracts, not just what it adds. If your lease has an abatement period and the premium formula uses “Rent payable” during the transfer term, your own free rent inflates the landlord’s share, and the fix is the second sentence of paragraph 20 at Oyster Point. Third, read the next section before you celebrate the deduction list, because a landlord with a 30 day recapture right can answer your Transfer Notice by taking the space, releasing it to your subtenant directly, and keeping all of the spread, and in that world the deduction list you spent two weeks on never applies.
Footnotes
[1] Lease dated 28 May 2026 between Hudson Metro Center, LLC, as landlord, and Sagimet Biosciences Inc., as tenant, for Suite 1500, 950 Tower Lane, Foster City, California (“Metro Center Tower”), 7,204 rentable square feet, filed as Exhibit 10.1 to Sagimet’s Form 10-Q on 11 August 2026. Section 14.3 states the 75% share and defines Transfer Premium without any deduction. Section 14.1 imposes the $1,500 review fee “whether or not Landlord consents.” Section 14.4 gives the landlord 30 days from the Transfer Notice to terminate as to the Contemplated Transfer Space, with base rent, tenant’s share and parking adjusted proportionately. Section 14.5 contains both the CPA or CFO certification requirement and the prohibition on subleases measured by the subtenant’s net income or profit: https://www.sec.gov/Archives/edgar/data/1400118/000119312526343441/sgmt-ex10_1.htm
[2] Lease between Cambridge 1030 Mass Ave, LLC and Obsidian Therapeutics, Inc. for 17,805 rentable square feet at 1030 Massachusetts Avenue, Cambridge, Massachusetts, filed as Exhibit 10.12 by Gazelle Parent, Inc. on 22 April 2026. The lease is dated May 2017; the day of the month is left blank in the filed copy, so do not read the filing date as the lease date. Section 14.3 takes 50% of the Transfer Premium after the four enumerated categories of “reasonable third party expenses,” and amortizes free rent and transferee improvement allowances straight-line over the sublease term: https://www.sec.gov/Archives/edgar/data/2130606/000119312526170834/d117787dex1012.htm
[3] Lease dated 3 May 2024 between 90 New Montgomery Partners, a California Limited Partnership, and Ethos Technologies Inc. for space at 90 New Montgomery Street, San Francisco, filed as Exhibit 10.10 on 26 September 2025. Section 14.3 takes 50% after only improvements and brokerage commissions, and omits “third party” from the governing phrase. The typographical error “f Landlord consents” is in the filed document. The same exhibit records an existing chain of occupancy in the building, with Sigma Computing as tenant under a 6 June 2018 lease and a 15 November 2021 sublease to Landed, Inc.: https://www.sec.gov/Archives/edgar/data/1788451/000119312525219975/d901135dex1010.htm
[4] Lease dated 17 March 2017 between HCP Oyster Point III LLC and Global Blood Therapeutics, Inc. for 67,185 rentable square feet on the second and third floors of 171 Oyster Point Boulevard, South San Francisco, California, in the project known as The Cove at Oyster Point, filed as Exhibit 10.1 to an 8-K on 22 March 2017. Section 14.3 as originally executed allowed three deductions, each limited to costs incurred “in connection with such Transfer.” Item 5 of the basic lease information sets the Tenant Improvement Allowance at “$140.00 per RSF of the Premises (i.e., $9,405,900.00)” and item 6 sets Tenant’s Share at 50.59%. Rent was payable to HCP Life Sciences REIT, and the footer of each page carries “HCP, INC. [The Cove at Oyster Point],” which is useful if you are trying to match the entity on the signature page to the sponsor: https://www.sec.gov/Archives/edgar/data/1629137/000119312517092270/d361390dex101.htm
[5] First Amendment to Lease, made as of 29 August 2018, between the same parties, substituting the entirety of 181 Oyster Point Boulevard, approximately 164,150 rentable square feet, for the original premises, filed as Exhibit 10.1 to an 8-K on 30 August 2018. Paragraph 20, “Transfer Premiums,” inserts the unamortized-improvement parenthetical at the end of subpart (i) of Section 14.3 and excludes the first five months of reduced rent under Section 4.2 of the amendment from the Transfer Premium calculation. Paragraph 21 of the same amendment obliges the landlord to fix the cell phone reception in the buildings at its own cost and not as an operating expense, which is unrelated and is my favorite clause in the document: https://www.sec.gov/Archives/edgar/data/1629137/000119312518263585/d611555dex101.htm
[6] Sublease dated 16 March 2023 between Kriya Therapeutics, Inc. as sublandlord and Talis Biomedical Corporation as subtenant, for 13,165 rentable square feet at 1100 Island Drive, Suite 101, Redwood City, California, under a master lease from Westport Office Park, LLC, filed as Exhibit 10.19 on 22 March 2023. Section 8.3 splits Bonus Rent fifty-fifty after payment of any amount owed to the master landlord, and conditions the free rent and improvement allowance deductions on the concession being “credited, applied or payable to such Transferee.” Section 8.4 gives the sublandlord a termination option in lieu of consent where the subtenant seeks to transfer more than 50% of the premises for substantially all of the term: https://www.sec.gov/Archives/edgar/data/1584751/000095017023009197/tlis-ex10_19.htm
[7] Goldman Sachs Group, Inc. v. Almah LLC, 85 A.D.3d 424, 924 N.Y.S.2d 87 (1st Dep’t 7 June 2011). The court read article 12.6 “as an integrated whole and not in isolation” and held that “only actual ‘payment’ made by the assignee and ‘receipt’ by the assignor as consideration would trigger the profit-sharing clause,” so intangible value flowing to the tenant from a related-party transaction was outside the clause. The clause as the court reproduced it took “fifty percent (50%) of all sums… and other consideration payable to Tenant by the assignee for or by reason of the assignment,” reduced by “the actual expenses incurred in good faith by Tenant in connection with such assignment,” and payable “if, as and when Tenant receives such sums.” It was that netting-and-receipt structure, rather than any separate definition, that confined the clause to cash. The New York official reporter blocks automated requests; the text quoted here is from the Caselaw Access Project static mirror: https://static.case.law/ad3d/85/cases/0424-01.json
[8] Carma Developers (California), Inc. v. Marathon Development California, Inc., 2 Cal. 4th 342 (30 March 1992). Paragraph 15(b) of the lease let the lessor terminate on receiving notice of a proposed transfer and then “enter into a new lease… with the intended assignee or sublessee,” in which case the lessee “shall not be entitled to any portion of the profit.” The court held this was neither an unreasonable restraint on alienation nor a breach of the implied covenant, and characterized the lessee’s claim to a share of sublease profit as an attempt “to recapture potential benefits previously bargained away”: https://static.case.law/cal-4th/2/cases/0342-01.json
[9] In re Jamesway Corp., 201 B.R. 73 (Bankr. S.D.N.Y. 30 September 1996) (Garrity, J.). The decision invalidates profit sharing provisions in several store leases under 11 U.S.C. section 365(f)(1) and declines to carve out percentages the landlords argued were reasonable. The opinion quotes the Newberry lease provision in full, including its deduction list for brokerage fees, attorneys’ fees, costs to prepare the premises, and amounts paid for the tenant’s fixtures. The hyphenation of “as-signee” in the quoted clause is an artifact of the printed reporter: https://static.case.law/br/201/cases/0073-01.json
[10] South Coast Plaza v. Standor Jewelers West, Inc. (In re Standor Jewelers West, Inc.), 129 B.R. 200 (9th Cir. BAP 27 June 1991). Paragraph 10.01(e) of the lease entitled the landlord, as a condition of consent, to “75% of all consideration given, directly or indirectly by the assignee to tenant for tenant’s leasehold interest.” The panel affirmed the order denying the claim, holding that “a provision which conditions or restricts the ability of a debtor to fully realize the economic value of its lease upon assignment is invalid”: https://static.case.law/br/129/cases/0200-01.json
[11] In re National Sugar Refining Co., 21 B.R. 196 (Bankr. S.D.N.Y. 22 June 1982), discussed and distinguished in Standor at 129 B.R. 200. The provision operated only on a consensual assignment, so it gave the landlord no right to the profits of an assignment made by the debtor in possession under section 365(f). Two further decisions invalidating profit sharing provisions are cited in Jamesway but I have not read their text: Robb v. Schindler, 142 B.R. 589 (D. Mass. 1992), on a clause requiring 80% of net proceeds, and In re Office Products of America, 140 B.R. 407 (Bankr. W.D. Tex. 1992).
[12] Cushman & Wakefield, U.S. Office MarketBeat, Q2 2026, released July 2026: “Vacant sublease space fell 15.4% year-over-year to 95.6 msf, now sitting 28% below its Q1 2024 peak and returning to levels last seen in early 2021. Available sublease space now represents 1.8% of total U.S. office inventory.” Note that this series counts vacant sublease space; Avison Young’s Q2 2026 U.S. Office Insights measures sublet availability, which includes space a departing tenant still occupies, and puts it at 2.6% of a 4.68 billion square foot inventory. The two numbers are not interchangeable: https://www.cushmanwakefield.com/en/united-states/news/2026/07/us-office-marketbeat
[13] Newmark, San Francisco Office Market Overview, 2Q26, published 21 July 2026. “Sublease asking rents declined in the second quarter of 2026 to 52.34 dollars per square foot, while direct rents rose by more than 3 percent over the same period. As a result, the spread between sublease and direct rates is now wider than at any point since the start of the pandemic.” The $77.89 direct class A figure is a chart label on the same page rather than a sentence in the text. The report also records available sublease space in San Francisco falling to 4.1% of the market, from 6.7% a year earlier and 10.8% at the mid-2023 peak: https://nmrk.imgix.net/uploads/fields/pdf-market-reports/2Q26-San-Francisco-Office-Market-Report_2026-07-21-210052_ilcr.pdf
[14] On the absence of case law about which costs are deductible: a search of the govinfo United States Courts Opinions collection returned nothing responsive on sublease profit deductions, and the controlling section 365(f) decisions predate that collection’s coverage. A negative search result is weak evidence, and disputes of this kind would concentrate in state trial courts and unpublished decisions I did not search. Maryland’s intermediate appellate court came close in Retreat Road, LLC v. Miscellaneous Metals, Inc., No. 943, Sept. Term 2023 (29 January 2025), holding a sublease consideration provision ambiguous, but the opinion is unreported and states that it “may not be cited as precedent within the rule of stare decisis.” The precedential Maryland authority it relies on is Julian v. Christopher, 320 Md. 1 (1990), on a landlord’s refusal of consent made solely to secure a rent increase: https://www.mdcourts.gov/sites/default/files/unreported-opinions/0943s23.pdf
Acrebase is AI-powered contract intelligence for commercial real estate. It drafts, redlines and proofreads leases and other CRE documents, extracts clauses and flags risk across a portfolio, and keeps a team’s approved clause library and negotiation playbook consistent from one deal to the next, with fallback positions drawn from how earlier negotiations actually went. Learn more at acrebase.com, or get in touch about pricing.