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SFO seeks temporary rent relief for DFS Group, estimating $74.6M in reduced revenue over four years
Summary
SFO proposed Amendment No. 6 to DFS Group’s international terminal lease to lower percentage rent and the minimum annual guarantee for 2026–2029; staff said the change responds to lower luxury retail spending and estimated a $74.6M revenue reduction to the airport and a $11.2M reduction to the general fund share over four years; the committee forwarded the item to the Board.
SFO staff presented an amendment to the DFS Group LP international terminal lease proposing a temporary reduction in percentage rent and minimum annual guarantee for lease years equivalent to calendar 2026 through 2029. Daniel Singh said the amendment would reduce the minimum annual guarantee for 2026 to $25,000,000 (with annual adjustments thereafter) and change the percentage rent schedule to roughly 28% for sales up to $100M and 32% above $100M for the relief period.
SFO reported DFS and its joint‑venture partners have sustained operating losses since the lease began and that the passenger mix and per‑passenger luxury spending have not returned to pre‑pandemic projections. The airport estimated the amendment would provide approximately $74.6M in total rent assistance to the joint venture over four years and reduce general fund revenue (15% share of non‑airline revenues) by approximately $11.2M over the same period.
Controller’s Office staff said they are updating the five‑year forecast and will publish updated general fund revenue projections; SFO’s director of revenue development and management described conservative sales projections and demographic changes in international travel as reasons for incremental relief. The committee forwarded the amendment to the Board with a positive recommendation.
