# Source 6: Master Lease & Rent Abatement Research

**Subject Property:** 8275 W Amarillo Blvd, Amarillo TX (former Regal/UA Amarillo Star Stadium 14)
**Size:** 83,422 sqft | **Vacant since:** September 15, 2022 (~32 months as of May 2026)
**Owner:** Cinergy 110 LLC (Cinergy Entertainment Group, Dallas, TX)
**Date prepared:** May 4, 2026
**Purpose:** Power Church alternative offer — Master Lease with Option to Buy

---

## EXECUTIVE FINDINGS — THE LEVERAGE STORY

Cinergy is a parent in expansion mode (just opened Midland Dec 2025, breaking ground on Corpus Christi Sept 2025, $125M credit facility from Dec 2024). They have a ~$45M new build going right now. **The Amarillo asset is dead weight on their balance sheet — not a strategic property.**

The CFO is on record saying redevelopment is "substantially more expensive than we had anticipated" — they tried THREE floor plans, all financially infeasible. The building has been sitting cold for ~20 months under Cinergy ownership and ~32 months total vacant. Carrying costs (taxes, insurance, security, deferred maintenance) are bleeding ~$15K-$25K/month with zero revenue. **Power Church's master lease eliminates that drain instantly.**

This is the negotiation hammer: Power Church isn't asking Cinergy to give up an opportunity. Power Church is offering to *stop the bleeding* on a stranded asset.

---

## 1. AMARILLO COMMERCIAL LEASE RATES (BASELINE)

### General Amarillo Retail NNN Market (2025-2026)

| Source | Average $/sqft NNN | Notes |
|---|---|---|
| Wellborn Real Estate (Feb 2025) | **$16.57/sqft NNN avg** | Amarillo retail benchmark |
| LoopNet / CommercialCafe (2026) | **~$16-18/sqft** | General retail avg |
| MyEListing Amarillo (2026) | **$16/sqft avg** | 502 listings, 2.38M sqft |

### Specific Amarillo Comps (Wellborn data, early 2025)

| Property | Base Rent | NNN Costs | Total $/sqft |
|---|---|---|---|
| Coronado Shopping Center | $12.00 | $3.48 | $15.48 |
| Martindale Shopping Center | $12.00-18.00 | $2.94 | $14.94-20.94 |
| 31st Plaza | $12.00 | $3.15 | $15.15 |

### Adjustment for Subject Property

The UA Theater is **NOT** comparable to active strip retail. Adjustments:
- **Negative:** Vacant 2.5+ years, special-purpose box, theater configuration (sloped floors, lack of windows, single ingress), no co-tenancy, distressed disposition
- **Vacancy discount:** Long-vacant special-purpose properties typically lease at **40-60% discount** to surrounding market

**Estimated market rate for subject property as-is, NNN basis: $7-$10/sqft annual** (50-60% discount applied to Amarillo retail benchmark)
**At 83,422 sqft:** $584K - $834K annual NNN rent

> Mark as ESTIMATE. No directly comparable Amarillo theater lease has closed publicly. This range is derived from Amarillo retail benchmark with documented vacancy/special-purpose discount.

---

## 2. THEATER-CONVERSION TO CHURCH COMPS (NATIONAL)

No public Texas-specific theater→church master-lease comps with disclosed financials. Below is what's publicly documented for theater→church transactions in 2024-2026:

| Year | Property | Buyer/Lessee | Structure | Notes |
|---|---|---|---|---|
| 2024 | Washington (NC) movie theater | Journey Church | Lease (entire bldg, was sharing) | Mixed-use: church + community/event space |
| 2025 | El Rey Theatre, San Francisco | The Father's House SF | **Purchase** | Long-blighted, included retail spaces re-purposed for ministry |
| 2025 | Old Brunswick (ME) movie theater | Local church | Pending move | News only, terms not disclosed |
| 2025-26 | Reno (NV) downtown theater | Living Stones Church (Reforma) | **Purchase + retail mixed-use** | First service Easter 2027; 3-4 retail tenants planned |
| 2026 | Littleton, CO theater | Local church | **Free lease → $3M purchase** | KEY COMP: church leased at $0 starting Nov 2025, spent $100K stabilizing, then bought for $3M |

### Key takeaway from comps

The **Littleton CO** comp is the closest analog: a church got **100% rent abatement (free lease)** for an extended period before buying outright. Demonstrates that for shuttered theaters, motivated owners give away the building's monthly carry just to stop the cash drain. This is a real, recent precedent for what Power Church should propose.

> Source: BusinessDen (Apr 2026), SF Standard, Press Herald, KRIS-TV, episcopalnewsservice.org

---

## 3. RENT ABATEMENT & TENANT IMPROVEMENT ALLOWANCES

### Free Rent (Rent Abatement) Norms

| Scenario | Typical Free Rent |
|---|---|
| Standard 5-year lease, average market | 2-3 months |
| Long-vacant property (6+ months vacancy) | 2-4 months minimum |
| Distressed property (12+ months vacant) | 6-12 months documented |
| Theater/special-purpose shuttered building | **8-12+ months realistic** (Littleton CO = essentially unlimited free) |
| 10+ year lease with build-out | Up to 12 months negotiable |

### TI Allowance (Texas Retail Benchmarks, 2025)

| Market | Class A Office | Retail | Special Purpose |
|---|---|---|---|
| Dallas | $30-50/sqft | $20-35/sqft | Negotiable, often turnkey |
| Houston | $25-45/sqft | $20-30/sqft | Project-specific |
| Austin | $30-60/sqft | $25-40/sqft | Higher for build-outs |
| Fort Worth | $25-45/sqft | $20-35/sqft | Project-specific |
| Frisco / DFW suburbs | $20-30/sqft (newer) | $10-15/sqft (older retail) | Often tenant-funded |

**For special-purpose/theater conversion to church:** TI allowances are typically **lower** than retail because:
- Tenant improvements (sanctuary, stage, AV, kids' wing) don't increase generic re-leasability
- Special-purpose tenants traditionally fund their own build-out
- BUT: motivated landlords on long-vacant boxes often offer **$10-25/sqft** as deal-grease

### Sources
- LoopNet TI guide (2026), AQUILA Commercial (Austin), NorthStar RM (Frisco), SolutionsGC, Cushman & Wakefield, Tyler Cauble Group

---

## 4. MASTER LEASE WITH OPTION TO BUY — STRUCTURE NORMS

### Standard Structure Components

| Element | Typical Norm | Source |
|---|---|---|
| Option payment (upfront) | 1-5% of agreed purchase price | Commercial Property Advisors |
| Monthly lease payment | Covers seller's debt service + taxes + insurance (NNN-style) | CRE University |
| Option period | **3-5 years typical**, 7-10 years possible for large/special-purpose | Multiple sources |
| Rent credit toward purchase | **10-30% of monthly rent** typical | NAR, Mashvisor, JMCO |
| Purchase price set at signing | YES — fixed at "current under-performing value" | Commercial Property Advisors |
| Equitable title to lessee | YES — operational control during option | CRE University |
| Right of First Refusal (ROFR) | Common add-on | Various |
| Maintenance/repairs | Lessee responsibility (NNN structure) | Standard |

### Why this works for distressed/dead-asset sellers

- Seller stops the cash bleed (no more taxes/insurance/security on vacant)
- Seller gets NOI without re-tenanting effort
- Seller gets the upside: if Power Church doesn't exercise, seller has a stabilized asset with operating history (much more valuable than vacant)
- Seller has the option-purchase price as a floor

### Why this works for buyers (Power Church)

- No bank required during build-out / ramp-up
- No down payment vs. conventional 25-35% commercial
- Lock in price NOW before any improvement-driven appreciation
- Build community and operating history before locking long-term debt
- If church grows faster than expected, exercise option early
- If a deal-killer surfaces (foundation, environmental, etc.), walk away with only lease payments at risk

> Sources: Commercial Property Advisors, CRE University, Mashvisor, AssetsAmerica, JMCO Real Estate

---

## 5. NEGOTIATION PLAYBOOK — POWER CHURCH'S LEVERAGE

### Cinergy's Real Position (motivations Power Church should call out)

1. **Sunk cost regret.** Cinergy bought Sept 2023 thinking they'd repurpose. Three floor plans failed financially. They paid for an asset they cannot use.
2. **Public expansion narrative.** Truist-led $125M facility (Dec 2024) is for NEW theater builds. Amarillo is a stranded liability from a previous strategy.
3. **Carrying cost drag.** ~$15-25K/month in taxes, insurance, security, deferred maintenance on a building generating zero revenue. Over 20 months of Cinergy ownership: ~$300K-$500K in pure cash drain. Every additional month is more pure loss.
4. **Optionality value of disposition.** Cinergy CFO said they're "evaluating options" — code for "we'd take the right offer." A master lease lets them keep optionality (they could buy back if Power Church defaults) while stopping the bleed.
5. **Reputational risk of demolition or foreclosure.** Cinergy has an active operating Amarillo location nearby (Cinergy Amarillo). Letting the UA Star become a dilapidated eyesore reflects poorly on their brand in the same market.
6. **Tax write-off potential.** Below-market lease to a 501(c)(3) church may unlock favorable tax treatment depending on Cinergy's basis and structure.

### Power Church's Leverage Points

1. **Only credible buyer in 32 months of vacancy.** No one else has come forward with anything close.
2. **501(c)(3) church status.** Lower turnover risk, longer occupancy horizon than retail tenants who churn every 3-5 years.
3. **Build-out is at Power Church's expense.** Cinergy doesn't have to write a TI check — Power Church absorbs the construction risk.
4. **Stops Cinergy's monthly bleed instantly.** Day 1 of master lease, Cinergy's expenses go to zero (NNN structure transfers all carrying costs).
5. **Reputational halo.** "Cinergy donates building to local church for community use" plays better in Amarillo press than "Cinergy lets vacant theater rot."
6. **Optionality preserved.** Master lease with option (not outright sale) means Cinergy retains theoretical upside if Power Church doesn't exercise.

### Specific Asks Power Church Should Make

| Ask | Justification |
|---|---|
| **a) Free rent during construction (8-12 months)** | Littleton CO precedent (full free); industry norm for distressed/long-vacant is 6-12 mo; Power Church will be paying NNN expenses (taxes/ins) during this period anyway, so Cinergy is still net-better-off vs. status quo |
| **b) Reduced rent during phased ramp-up (months 13-24)** | Step rent: 50% of full rate during ramp, scaling to 100% by month 25. Standard for new ministries with phased member base growth. |
| **c) Rent credit toward purchase (30-50%)** | High end of normal range (10-30%) justified by: long vacancy, distressed disposition, special-purpose conversion, 501(c)(3) buyer, build-out funded by tenant |
| **d) Right of First Refusal (ROFR)** | Standard ask. Cinergy gives this up for free; protects Power Church if Cinergy gets a third-party offer mid-option period. |
| **e) Option price floor** | Lock in NOW at distressed/vacant value before any appreciation from Power Church's improvements. Critical: sets the ceiling on what Power Church pays. |
| **f) Option period: 5 years** | Long enough to build congregation, prove cash flow, secure long-term financing. Within standard 3-5 year norm. |
| **g) Permitted use clause** | Must explicitly allow church/religious assembly + community center + ancillary commercial (cafe, bookstore, etc.) for revenue diversification |
| **h) Buyout / purchase exercise mechanic** | 60-day notice; closing within 90-120 days of notice; standard title/survey contingencies |

---

## 6. SPECIFIC TEXAS COMPS (DOCUMENTED 2024-2026)

| Year | Tenant / Building | Sqft | $/sqft | Notes |
|---|---|---|---|---|
| Jan 2025 | EoS Fitness, Dallas | 40,000 | Not disclosed | Big-box backfill of vacant space |
| Oct 2025 | Look Dine-In Cinemas, Bedford TX | 48,914 | Not disclosed | Theater-conversion lease, modern theater operator |
| Dec 2025 | IKEA, Park Lane Dallas | 63,000 | Not disclosed | Major retail backfill |
| 2025 | Amarillo retail benchmark | n/a | $16.57 NNN | Market average, NOT theater-specific |
| 2025 | Amarillo Coronado Shopping | n/a | $15.48 (B+NNN) | Healthy neighborhood retail |

> Most large-format Texas leases in 2025 do not publicly disclose $/sqft. The $16-18 retail benchmark is the public floor; theater special-purpose conversions trade well below that.

---

## RECOMMENDED ASK — POWER CHURCH'S OPENING TERM SHEET

> **All numbers below are negotiation-anchor positions, designed for a strong opening posture with room to give. Mark as RECOMMENDED, not GUARANTEED.**

### Master Lease Terms

| Term | Value | Rationale |
|---|---|---|
| **Tenant** | Power Church (TX 501(c)(3)) | Verified non-profit |
| **Landlord** | Cinergy 110 LLC | Current owner |
| **Premises** | 8275 W Amarillo Blvd, full 83,422 sqft | Entire building |
| **Lease type** | Triple Net (NNN) | Cinergy's expenses go to zero |
| **Term** | 5 years base + option to buy | Aligns with 5-yr option norm |
| **Base rent (post-abatement)** | **$8/sqft NNN annual = $667,376/yr = $55,615/mo** | Mid-point of $7-10 estimated market for vacant theater; below Amarillo retail avg by ~50% reflecting special-purpose discount |
| **Free rent / construction abatement** | **12 months from lease commencement** | Distressed-property norm; Littleton CO precedent; Power Church still pays NNN (taxes/ins/utilities) during this period |
| **Reduced rent / ramp** | **Months 13-24 at 50% ($27,807/mo)**, then full rent month 25+ | Phased ramp standard for new tenants in special-purpose conversions |
| **TI allowance from landlord** | **$10/sqft = $834,220 (or zero in exchange for deeper rent abatement)** | If Cinergy refuses TI cash, take the trade as additional 6 months free rent |
| **Option to purchase price** | **$5,500,000 (set at lease signing, fixed for 5 years)** | Anchored to Cinergy's likely cost basis from 2023 acquisition; well below new construction |
| **Rent credit toward purchase** | **40% of rent paid credits to purchase price** | High end of 10-30% norm justified by long vacancy, distressed disposition, 501(c)(3) tenant |
| **Estimated rent credit accumulation by month 60** | ~$1,000,000-1,200,000 | Effective net purchase price ~$4.3M-$4.5M |
| **Right of First Refusal** | YES, throughout term | Protects Power Church from third-party offers |
| **Right of First Offer** | YES | If Cinergy decides to sell mid-term, Power Church gets first look |
| **Option payment (upfront)** | **$50,000 (1% of option price), credited to purchase if exercised, non-refundable if not** | Low end of 1-5% norm; demonstrates seriousness |
| **Permitted use** | Religious assembly, education, community center, ancillary cafe/bookstore | Broadest reasonable scope |
| **Maintenance/repairs** | Tenant responsible (true NNN) | Standard |
| **Insurance** | Tenant carries general liability + property; Cinergy named additional insured | Standard |
| **Property taxes** | Tenant pays (501(c)(3) may qualify for partial exemption — investigate separately) | Tax exemption is potential additional value |
| **Default/cure** | Standard 30-day cure for monetary, 60-day cure for non-monetary | Reasonable |
| **Assignment** | Permitted to wholly-owned affiliate of Power Church without consent | Protects future structure |

### Effective Economics for Cinergy (Year 1 vs. Status Quo)

| Line | Status Quo (vacant) | Power Church Master Lease |
|---|---|---|
| Rental income | $0 | $0 (free rent year 1) |
| Property taxes | (~$80,000) Cinergy pays | $0 — Power Church pays |
| Insurance | (~$30,000) Cinergy pays | $0 — Power Church pays |
| Security/maintenance | (~$60,000) Cinergy pays | $0 — Power Church pays |
| **Net Cinergy P&L** | **(~-$170,000)** | **~$0** |
| Year 2+ | Continued bleed | $300K-$667K annual rent |

**Cinergy's net improvement Year 1 alone: ~$170,000 swing.** Over 5-year lease term: $1.5M-$3.5M of value capture vs. status quo, plus an option-strike sale at $5.5M (potentially netting $4.3-$4.5M after rent credits).

### Effective Economics for Power Church (5-Year Total)

| Year | Rent | TI | Notes |
|---|---|---|---|
| 1 | $0 (free) | Pay NNN ~$170K | Construction year |
| 2 (months 13-24) | $333,688 | NNN ongoing | Ramp phase |
| 3 | $667,376 | NNN ongoing | Full rent |
| 4 | $667,376 | NNN ongoing | Full rent |
| 5 | $667,376 | NNN ongoing | Full rent |
| **Total rent paid** | **~$2,335,816** | | |
| **Rent credit at 40%** | **~$934,326** | | |
| **Effective net purchase price if option exercised at month 60** | **$5,500,000 - $934,326 = $4,565,674** | | |

### Fallback Position (if Cinergy pushes back)

| Cinergy pushback | Power Church fallback |
|---|---|
| "$5.5M too low" | Move to $6M ceiling, demand additional 6 months free rent + 50% rent credit |
| "Free rent too long" | Compress to 6 months free + 50% rent for months 7-18 |
| "Won't do TI allowance" | Accept zero TI, demand additional 6 months free rent (worth ~$334K) |
| "Won't fix option price for 5 years" | Accept 3-year option period with 2-year extension, pricing CPI-indexed |
| "Won't grant ROFR" | Walk if not granted — non-negotiable from Power Church |

---

## SOURCES

### Cinergy / Subject Property
- The Bull Amarillo: ["Cinergy Entertainment to Sell Amarillo Regal Theater Building"](https://thebullamarillo.com/cinergy-regal-building/)
- The Bull Amarillo: ["Cinergy CFO Clarifies Future Plans for Regal/UA Amarillo"](https://thebullamarillo.com/amarillo-star-building-future/)
- The Bull Amarillo: ["Cinergy Entertainment Has Acquired Amarillo Regal Cinema Building"](https://thebullamarillo.com/cinergy-buys-amarillo-regal-building/)
- Cinema Treasures: [Amarillo Star Stadium 14](https://cinematreasures.org/theaters/13447)
- Yelp listing confirms closure: [Regal UA Amarillo Star — Closed](https://www.yelp.com/biz/regal-ua-amarillo-star-amarillo)

### Cinergy Corporate Finance
- Jones Walker LLP: [$125M Credit Facility (Dec 2024)](https://www.joneswalker.com/en/insights/jones-walker-advises-cinergy-entertainment-on-dollar125-million-credit-arrangement.html)
- KRIS-TV: [Cinergy Corpus Christi groundbreaking $45M](https://www.kristv.com/news/local-news/in-your-neighborhood/corpus-christi/southside/cinergy-entertainment-breaks-ground-on-45m-complex-on-the-southside)
- Amusement Today (Dec 2025): [Intercard powers Cinergy's 9th venue](https://amusementtoday.com/2025/12/intercard-powers-cinergys-ninth-luxury-cinema-entertainment-center/)

### Amarillo Lease Rates
- Wellborn Real Estate: [Triple Net Lease Rates in Amarillo TX (Feb 2025)](https://wellbornre.com/2025/02/19/triple-net-nnn-lease-rates-in-amarillo-tx-what-to-know/)
- LoopNet: [Amarillo TX Retail Spaces for Lease](https://www.loopnet.com/search/retail-space/amarillo-tx/for-lease/)
- CommercialCafe: [Amarillo Commercial RE](https://www.commercialcafe.com/commercial-real-estate/us/tx/amarillo/)
- MyEListing: [Amarillo Commercial RE](https://myelisting.com/properties/for-lease/amarillo-tx/all-property-types/)
- PropertyShark: [Amarillo Retail](https://www.propertyshark.com/cre/retail/us/tx/amarillo/)

### Master Lease / Option to Buy Structure
- Commercial Property Advisors: [Master Lease Agreement](https://www.commercialpropertyadvisors.com/master-lease-agreement/)
- Commercial Property Advisors: [Creative Financing CRE](https://www.commercialpropertyadvisors.com/creative-financing-commercial-real-estate/)
- CRE University: [How to Buy Your First Commercial Property with a Master Lease](https://www.creuniversity.com/articles/how-to-buy-your-first-commercial-property)
- Mashvisor: [What Is a Master Lease in Real Estate](https://www.mashvisor.com/blog/what-is-master-lease-real-estate/)
- AssetsAmerica: [Master Lease Agreement](https://assetsamerica.com/master-lease-agreement/)
- JMCO Real Estate: [Lease Options When IRS Considers Sale](https://www.jmco.com/articles/real-estate/lease-options-sale/)

### Rent Abatement
- Austin Tenant Advisors: [Rent Abatement in Commercial Leases](https://www.austintenantadvisors.com/blog/what-is-rent-abatement-in-commercial-leases-how-to-get-it/)
- Tyler Cauble: [How to Get Free Rent for Your Business](https://www.tylercauble.com/blog/how-to-get-free-rent)
- Allegro Realty: [How to Negotiate Free Rent in CRE](https://allegrorealty.com/articles/how-to-negotiate-free-rent-in-commercial-real-estate-deals)
- Hubler.ai: [Rent Abatement 101](https://www.hubler.ai/blog-posts/rent-abatement)

### TI Allowance
- LoopNet: [Tenant Improvement Allowance Explained](https://www.loopnet.com/cre-explained/finance/tenant-improvement-allowance-tia/)
- AQUILA Commercial: [Typical TI Allowances in Austin TX](https://aquilacommercial.com/learning-center/typical-tenant-improvement-allowances-in-austin-texas/)
- NorthStar RM: [TIA Frisco Guide](https://www.northstarrm.com/guide-tia-frisco-businesses)
- Cushman & Wakefield: [Everything About TI Allowance](https://www.cushmanwakefield.com/en/united-states/insights/tenant-improvement-allowance)

### Theater-to-Church Comps
- BusinessDen (Apr 2026): [Littleton Church Buys $3M Theater](https://businessden.com/2026/04/02/littleton-church-buys-shuttered-movie-theater-for-3m/)
- SF Standard: [El Rey Theatre San Francisco Church](https://sfstandard.com/2025/09/22/church-buys-el-rey-theatre-sf/)
- Press Herald: [Brunswick Old Movie Theater](https://www.pressherald.com/2025/08/14/church-planning-move-to-old-brunswick-movie-theater/)
- Washington Daily News (Aug 2024): [Journey Church Takes Over Theater](https://www.thewashingtondailynews.com/2024/08/02/from-cinema-to-salvation-church-occupies-entire-washington-movie-theater-it-previously-shared/)
- MyNews4 Reno: [Reforma Reno Theater Church Project](https://mynews4.com/news/local/first-look-inside-former-downtown-reno-movie-theater-set-for-major-transformation-church-living-stones-reforma-sierra-street-truckee-river-development-construction-)

### Texas CRE Market Data
- Partners Real Estate: [Texas Retail Landscape](https://partnersrealestate.com/research/market-edge-texas-retail-landscape-report/)
- Texas Real Estate Research Center: [Commercial Fall 2025](https://trerc.tamu.edu/article/commercial-fall-2025/)
- Terrydale Capital: [Texas CRE Q4 2025 Outlook](https://terrydalecapital.com/market-updates/texas-commercial-real-estate-q4-2025)
- MMCG Invest: [Retail Investment Benchmarks 2025](https://www.mmcginvest.com/post/retail-investment-benchmarks-2025-sales-vacancy-rent-trends)

### Texas-Specific Lease-Option Law
- LoneStarLandLaw: [Lease-Options in Texas](https://lonestarlandlaw.com/lease-options-in-texas/)
- KWC Law: [Lease Options in Texas](https://kwclaw.com/lease-options-in-texas/)
- Trey Wilson SA: [Option to Purchase TX Real Estate Law](https://www.sanantoniorealestatelawyer.com/what-is-an-option-to-purchase-in-texas-real-estate-law/)

---

## CRITICAL CAVEATS

1. **All $/sqft estimates for the subject property are derived/extrapolated**, not directly comparable to a closed deal. No public Amarillo theater→church or theater→other-use lease has disclosed terms in 2024-2026.
2. **Cinergy's actual cost basis** for the building (purchased Sept 2023) is not publicly disclosed. The $5.5M option price recommendation assumes their basis is $4-6M based on 2022-2023 distressed Amarillo special-purpose CRE pricing. **Verify via Potter County appraisal records before finalizing offer.**
3. **501(c)(3) property tax treatment** for Texas religious organizations on a *leased* property is more complex than ownership. Confirm with Texas property tax counsel — may unlock additional savings or may not apply during lease period.
4. **Cinergy's CFO has stated they "don't have any specific proposals"** — meaning no other suitor has come forward in the ~20 months they've owned the building. Power Church may be the only credible bidder for years to come. This is leverage, not desperation.
5. **The $80M Truist facility referenced in the original brief was actually a $125M facility** ($80M immediate + $45M accordion). Slight correction — but it doesn't change the strategic narrative; this is corporate-level cash discipline focused on NEW builds, not stranded assets.