Douglas Emmett 2013 v. I&G Direct Real Estate 10 CA2/2

BACKGROUND

1. The Lease The lease (Lease) concerns property for the Warner Center in Woodland Hills (the Property).1 The Lease was executed in August 1979. It originally was set to expire in 2054, but was later amended to extend to 2074. Emmett and I&G are both successors in interest to the original landlord and tenant. Section 3.05, contained in article III, sets the rent. For the first 25 years, rent was fixed at $185,142 annually. Thereafter, rent was to be 9 percent of the fair market value of the “Demised Premises” annually, as determined by agreement or appraisal every 25 years. Section 3.05(b) states that the value “shall be determined as if the Demised Premises were vacant, unimproved, unencumbered and free of this Lease, but subject to the restrictions on use set forth in Article VIII of this Lease.” The Lease was amended several times but this valuation language was not changed. Article VIII contains two sections: section 8.01 and section 8.02. As mentioned, section 8.01 states that “[t]enant may use the Property for general office use, commercial use, and all related or ancillary uses.” Section 8.02 is the section on legal compliance. It states that “[i]n the use…