Glossary

Amortized Tenant Improvements

Also known as: TI amortization, landlord-financed improvements

Tenant improvement costs a landlord funds above the negotiated allowance, or in lieu of a cash allowance, and recovers over the lease term as additional rent, typically with an interest component, rather than the tenant paying out of pocket.

This structure functions economically as landlord-provided financing, with the embedded interest rate reflecting the landlord's cost of capital and the tenant's credit risk. It is an important underwriting distinction for lenders and buyers, because amortized TI folded into the rent schedule inflates in-place contract rent relative to true market rent for comparably built-out space, requiring analysts to normalize the rent roll when evaluating sustainable NOI. If a tenant terminates early, it typically remains obligated for the unamortized balance of landlord-financed TI unless the lease provides otherwise, making this a key item to verify during lease abstraction and estoppel review.