Glossary

Gift Card Concession

Also known as: Gift Card Incentive

A leasing incentive paid as a gift card or prepaid debit card of a stated dollar value, rather than as a rent abatement, most often used for prospects who are rate-sensitive to the advertised rent itself or where a property wants to avoid a documented free-rent line on the lease.

Operators favor a gift card over an equivalent-value free-rent period because it does not reduce the contract rent shown on the lease or the rent roll delivered to a future buyer or lender, so it does not depress reported scheduled rent or complicate net-effective-rent disclosure the way a documented free-rent concession does — a distinction that matters at both refinance and sale. The tradeoff is that a gift card is typically booked as a marketing or leasing expense below the net rental income line rather than netted against rent, meaning it does not reduce reported gross potential rent or net rental income the way free rent does, so two concession types of similar economic value can produce materially different reported financials, a nuance buyers and appraisers must adjust for when normalizing a seller's trailing operating statement. Gift card concessions are also more easily capped to a fixed total dollar exposure across a leasing period than an open-ended free-rent commitment.