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Committee forwards SFO amendment to extend temporary rent relief for international duty‑free lease
Summary
The committee voted to forward a fourth amendment to the international terminal duty‑free and luxury store lease with DFS Group that extends a temporary reduced percentage rent structure, sets a temporary MAG of $30 million and a flat 36% percentage rent for specified lease years through 2026, with original terms to resume in 2027; the airport said this provides continued rent relief amid protracted international passenger recovery.
The Budget and Finance Committee on April 3 forwarded to the Board a resolution approving a fourth amendment to the concession lease between the San Francisco International Airport (SFO) and DFS Group LP for international terminal duty‑free and luxury stores.
SFO representatives said the amendment extends pandemic‑era rent accommodations, increasing the percentage rent to a flat 36% of gross revenues and establishing a temporarily reduced minimum annual guarantee of $30,000,000 for certain lease years starting in 2024 and continuing through lease year 07/2026, with the original base rent structure resuming in 08/2027. The airport noted the amendment would be retroactive to 01/01/2024 and that under the temporary structure it anticipates receiving approximately $126,700,000 over the three‑year period. The airport and the Budget and Legislative Analyst estimated the change provides about $10,000,000 per year in concession rent relief to the tenant and a general fund impact of about $1.5 million per year due to the city's share of concession transfers.
Supervisors expressed concern about long‑term strategy for airport concessions amid reduced international traffic and discussed diversifying offerings beyond luxury goods and outreach to other international markets. SFO said recovery of international traffic is expected to take several years and highlighted efforts to boost traffic and diversify concessions. With no public speakers, the committee voted 3–0 to forward the amendment to the Board with a positive recommendation.
