A co-tenancy clause is a lease provision that lets a tenant pay reduced rent or terminate if named anchor tenants or required occupancy levels are lost.
Co-tenancy clauses are most relevant in shopping centers, where one anchor's departure can affect the traffic of every other tenant. If the clause is triggered, the affected tenant may pay lower rent for a period or end the lease if the situation is not cured. When buying a property in a center, the investor should identify any co-tenancy rights the tenant holds, the named anchors, and the cure periods, since these provisions can make rent less secure than it appears.