Kickout Clause
A kickout clause gives a retail tenant the right to terminate the lease early if the tenant's sales fall below a specified threshold, typically requiring a termination fee.
What it means
Kickout clauses are typically found in retail anchor or junior-anchor leases. If the tenant's sales (usually measured over a trailing 12-month period) fall below a negotiated threshold — for example, $400/SF annual sales — the tenant has the right to terminate early with a specified fee.
From a landlord's perspective, kickouts are a concession to tenants who need an escape valve. From the tenant's side, they protect against locations that underperform. Landlords should understand any kickouts in their rent roll because they affect cash flow durability.
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