Item No.         6h supp
Date of Meeting      June 23, 2020
Third Amendment to Ground Lease
with Duke's Chowderhouse, LLC.
June 23, 2020

Maritime/EDD Tenant Relief Program
Terms approved by Commission/ED and within our Delegation of Authority
Defer all rent and other charges for four months (April-July) without interest.
" Tenant required to make commercially reasonable efforts to remain in operation
and/or reopen consistent with public health orders.
" Tenant certifies it has been significantly impacted by COVID-19
Deferred payment plan commencing on 10/1/20 with payback in 12 months  but also
negotiate payment plans to fit unique circumstances.
" Offer lease extension if tenant lease term is too short to payoff reasonably
Proposed relief consistent with what done across the Port
Extended terms
Deferred rent
Waiver of MAG (percentage rent only)

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Background
All restaurants closed by Governor's first order, March 23
Duke's 7 locations  Seattle, Bellevue, Kent, Southcenter, Tacoma
Long-term lease (20+ years remaining)
Seriously affected by COVID-19 and escalating construction
costs
Participating in deferral program with hope of lease
amendment

Duke's Current Ground Lease (as amended)
Full Service Restaurant (9200 SF ground lease)
Amended twice to enlarge development pad as design evolved
Rising construction costs and COVID-19 impacted feasibility
Construction costs than doubled over two+ years of design
$4.3 million to $8.3 million
COVID-19 closed all restaurants, working with 8 landlords
Committed to developing a smaller, more flexible facility

4

Revised Proposal for Duke's Chowderhouse
Revise business model and proposed development concept
COVID-19 is accelerating changes to restaurant industry
Smaller, contemporary "multi-modal" service (table served, mobile,
and takeout)
Have requested three years+ for redesign, permitting, and
construction plus some buffer for uncertainties due to COVID-19

Revised Terms for Ground Lease
Proposed terms
Reduce square footage  9200 SF to +-4500 SF
Defer construction rent for three years and pay back over lease term
(effective 4/1/20), Post-construction rent will start no later than
4/1/23 or Substantial completion, whichever is earlier.
Same base terms: Rent per square foot, expiration, etc.

Risks and Benefits
Risks
Continued economic downturn may prevent Duke's from
completing
Benefits
Likely the only viable restaurant option at Shilshole
Highly desired amenity for Shilshole customers and will bring new
visitors to SBM
Essentially no financial risk to Port since Duke's is financing
Retains revenue stream for this property

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