Businesses that build their own facilities at the airport do not pay rent on the buildings. But at the end of the term, the improvements become the property of the airport.
The original FedEx lease was executed in the early 1970s. It has been amended at least 27 times as FedEx has grown and made improvements at the airport.
The new lease will be the first time all of the FedEx holdings at the airport are covered under one lease with increases tied to the CPI, one of the most recognized measures of cost of living.
While the rates do not increase until 2008, FedEx will pay more in 2007 because it will be bringing more land under its lease.
In the last few years, the company has made plans to add in excess of 100 acres at the airport, principally because it agreed to take over the 103 acres the Tennessee Air National Guard will give up as it relocates its base to the southeast corner of the airfield at Swinnea and Shelby Drive.
While FedEx has not said what it intends to do with the land, it is expected to spend hundreds of millions making improvements, which the airport authority considers an investment in Memphis.
"We've got to make sure we have a clear pathway for their growth and one that recognizes the capital contribution they make over the long term," Brockman said.
One of the most recent examples is the $150 million FedEx is investing in new hangars for the Boeing 777s it will begin receiving in 2009.
The new contract will take the company through 2038. Two additional options give it rights to the property through 2058.
The original FedEx lease was to expire in 2012. Because it involves many pieces of land that came under lease in varying timeframes, Brockman and the company wanted to avoid deadline pressures.
"We discuss our operating parameters on a regular basis. We knew we need to look at getting this lease consolidated and getting things wrapped up better."
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