Reading an Airport Concession Agreement: What Lenders Scrutinize
When a concessionaire seeks financing, the concession agreement does the work a deed does in ordinary commercial lending. It is the asset the loan effectively rests on, so lenders read it line by line. A handful of provisions decide whether a deal is financeable at all.
Remaining Term vs Loan Amortization
Lenders want the agreement to run beyond the loan term, ideally with several years of cushion, because when the agreement ends the business, and the collateral, largely ends with it. A seven-year loan against an agreement with five years left is a non-starter. Extension options help only if they are firm and enforceable rather than granted at the airport's sole discretion.
Rent Structure: MAG and Percentage Rent
Concession agreements rarely carry flat rent. They set a minimum annual guarantee, a floor the operator owes regardless of sales, and a percentage rent, a share of gross sales, with the operator paying the greater of the two. That structure means rent climbs with success but never drops below the floor, which lenders model carefully when they test whether a location can carry new debt.
Assignment and Lender Consent
Because the agreement is the collateral, the lender needs to know it can step in if the borrower defaults. Airports typically require consent to assign the agreement, and many agreements limit or prohibit assignment outright. An agreement the lender cannot take over on default is far harder to finance. Negotiating leasehold-style consent and cure rights with the airport is often part of closing.
Refurbishment and Operating Obligations
Agreements commonly require mid-term refurbishment, minimum operating hours, street-pricing rules, and standards the operator must maintain. These are future cash obligations, and lenders fold them into the underwriting. A looming refurbishment requirement can meaningfully change how much a concessionaire can safely borrow today.
Educational content only, not advice. KQT Advisors, LLC is a commercial loan broker; we are not a lender, attorney, accountant, financial advisor, or fiduciary. We do not originate loans or make lending decisions. The information in this article is provided strictly for general informational and educational purposes and reflects our understanding at the time of writing. It is not, and must not be construed as, financial, tax, legal, accounting, investment, or any other professional advice, and creates no advisor-client relationship. Loan programs, rates, terms, eligibility requirements, fees, and approval criteria are set by individual lenders, the SBA, and other parties and are subject to change at any time without notice. Examples are illustrative only and not guarantees of outcome. Nothing here is a commitment to lend, an offer of credit, or a representation that any specific structure will be available to or appropriate for any borrower. Always consult your own qualified financial, tax, and legal advisors before acting on any information in this article. To the maximum extent permitted by law, KQT Advisors, LLC and its principals, employees, agents, and affiliates disclaim all liability for any direct, indirect, consequential, or incidental loss or damage arising out of any use of, reliance on, or inability to use the information in this article.