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  3. Healthcare Facility Documents - Frequently Asked Questions
  4. Master Lease Addendum
Frequently Asked Questions About Healthcare Facility Documents
Master Lease Addendum
 
 
1.  In the section line of Section 6 of the Master Lease Addendum (HUD-92211-ORCF), should “sublease” be capitalized?  Also, the term “Licenses” is capitalized in Section 14 but there is no corresponding definition of this term. (12/13/13)
 
2.  Can parties change the aggregate base rent under a master lease through reallocation?  (3/31/15)
 
 
 
 
1. In the section line of Section 6 of the Master Lease Addendum (HUD-92211-ORCF), should “sublease” be capitalized? Also, the term “Licenses” is capitalized in Section 14 but there is no corresponding definition of this term. (12/13/13)
 
To correct these scrivener’s errors, we capitalized the word “Sublease” in the second line of Section 6, and in Section 14, we changed “Licenses” to use lower case letters. A corrected document will be posted soon.
 
 
2. I have a question about paragraph 7 of the Master Lease Addendum (HUD-92211-ORCF), which provides the following, in part:
 
“Landlords may adjust and reallocate the amounts of Rent . . . so long as the total amount of Rent for all of the Healthcare Facilities in the aggregate shall not be decreased.” (Emphasis added).
 
By contrast, Section IX.4 of the Master Lease Mortgagee Letter (2014-06) states that “Owner may reallocate base rent allocated to each real property covered by a master lease so long as the total aggregate amount of base rent for all the leased premises is not increased.” (Emphasis added).
 
Do both provisions accurately reflect ORCF’s policy on reallocation, or is one a typo? (3/31/15)
 
Both the Master Lease Mortgagee Letter and the Master Lease Addendum are accurate with regard to reallocation under master leases. ORCF’s policy is to allow the collective Landlord under a master lease to reallocate contributions to the rent among the individual projects in the portfolio, so long as the aggregate rent does not change. Paragraph 7 of Master Lease Addendum directly prohibits any reallocation that decreases aggregate rent. The Addendum also prohibits reallocations that increase aggregate rent in paragraph 2, which requires the Landlord to comply with “Program Obligations.” That term encompasses all HUD mortgagee letters, including Mortgagee Letter 2014-06.  Accordingly, the Mortgagee Letter’s restriction on upward adjustments to aggregate rent through reallocation (a requirement that also appears in Section 17.8.4 of the 232 Handbook) is binding on all Landlords whose master lease includes the HUD Addendum.

HUD will consider revising paragraph 7 of the Master Lease Addendum to more clearly reflect ORCF’s policy during the next PRA update of the documents.