Of Nuggets, Details, Creativity and Sharing 

Nuggets 3

This summer has been hot, dry and pretty predictable. Good time for some pondering. We certainly get a wake up call when work picks up in late August after vacations burn off and folks head back into their routines.  This weeks’ stock market tumble got everybody’s attention right away as well.  Having time to think often leads to contemplation on how to better and more creatively craft and interpret these creatures known as leases and contracts.  Before diving back into specific topics, I wanted to share some nuggets of wisdom – you decide whether it’s wisdom or not for yourself – as well as some thoughts for the rest of 2015 that may be helpful.

details 1creativity 2sharing 1

Too often, as attorneys, brokers, asset managers and developers, folks get stuck in reflexive methods of putting together leases and contracts dealing with real estate. Yes it’s trite to say let’s “think out-of-the-box” (I hope that’s my last buzz word in this post) but it’s really the only way to move forward and be effective at what you do. There also some very bad habits that can be developed that although they might get the job done, end up creating situations where there are no real winners, a landscape of unforeseen circumstances and unexpected costs and delays.

Here are just a few:

Continue reading

Maximizing Results in Real Estate Transactions: How To Plan, Where to Save and Where to Spend? (PART 1)

controlling costs

How many times have you or your company looked back at a transaction and winced at some of the expenses and fees paid to close the deal? Wondered aloud whether the performance of your team and associated vendors and other professionals was properly analyzed and carried out? Thought about how the deal could have been structured more efficiently and each step discussed more thoroughly?

These are just some of the questions commercial real estate professionals struggle with as they try to become more productive, efficient and profitable. As with any business transaction there is no magic answer or manual for how to get the most out of every project while controlling costs and staying true to the goals originally set for the sale, purchase, lease or other transfer of real estate interests. However, these issues arise in every economic cycle, transaction and business regardless of the circumstances.

This will be the first in a series of posts analyzing how real estate companies and related businesses can work together to achieve the goals for each project, while controlling costs and maximizing results. This week we focus on the front end ideas, goals, initial planning and lining up the team to best work on the deal. Continue reading

Leases or Licenses – Careful What You Wish For!

online-business-choices

Just as we have previously reviewed and analyzed the differences between certain aspects of  sharing property rights, landlords and owners are often met with the challenge of whether to enter into lease or a license agreements when allowing businesses or individuals to use their real property. Although these contractual arrangements resemble each other in many structural ways, they have important legal and practical differences that should be considered before choosing one path or the other. Read on for five important differences… Continue reading

SPECIFICITY IN LEASES: When is too much detail a problem for the parties (or even in this article)?

specicity 2 specific 3

No one wants too much or too little. But where is the Goldilocks’ solution? Err on the side of too much rather than too little?  Stick to the amount determined by local business standards? Somewhere in the middle? Enough to get the deal the deal done?  Hmmmmmm….

In order to analyze this situation, let’s imagine subpoenas were issued for a representative of each of following players in a lease negotiation to given confidential testimony on this question, including their overriding goals. Each representative is given pure anonymity and the prompt to be as forthright and open as possible. The investigator interviews each person and then reviews his notes. A clear answer does not appear. Rubbing his eyes, he looks at the testimony again: Continue reading

Just Work With Me! – Best Intentions and “Waiver Creep”

work with me 2

When is it a good idea to keep working with a defaulting tenant?

How many times (even during a robust market) have landlords considered and perhaps acted on a tenant’s request to grant them abatement, deferrals and other concessions in order to preserve the relationship, avoid vacancy, make their lender happy and keep the rent coming in? More often than you might imagine.

Although there is clearly self-interests on both sides in the decision to allow the tenant to pay partial rent or defer overdue amounts under the lease, often landlords and tenants enter into such discussions with the best intentions for all involved.

Yet, even the most benevolent agreements can lead to negative consequences down the road. Continue reading

Growing Pains – Issues Surrounding the Construction or Re-Devolopment of Commercial Properties

Growing pains 3Growing pains 5

Let’s face it.  In the post recession market, Developers and Owners are ready to look for opportunities to build, expand, alter and modify their properties.  Although likely not as robustly as to pre-2008, there is retail, office and industrial re-development and expansion happening as we  read these words.  And with this change in the market comes an inevitable challenge between Landlords and Tenants as to their rights and obligations as new development moves forward and existing product is modified, altered and expanded.  The focus of this post is to delve into the issues relating to what these parties should discuss, plan for,  and work through during the growing pains.  One of the struggles is to determine the rights and responsibilities of the owner and the tenant when a dormant or unimproved property experiences growth and (yikes!) prosperity. As reflected below, change may not ultimately be a problem for either party.  Although there is a lot of advice for tenants, landlords can certainly benefit from this discussion. Continue reading

CAM Reconciliation Time – 10 Things To Remember!

CAM picture 1

It’s that season again. The owner and vendor costs have been received. Next, time to work through the Common Area Maintenance (CAM) costs, calculate allocations, send notices and so on…. What are 10 things that owners/property managers and tenants should remember and act on? Continue reading

What’s Ahead For CRE in 2015? – Predictions, Predicaments and Predilections

Future 2

2015 is here and the real estate market is back! Or is it? The beginning of the year is always a good time for reflection and planning for what may lie ahead for retail, industrial, office and multifamily properties;  lending; the economy; construction; investment;  and development. Here are some thoughts on what 2015 could look like. My local lens is Charlotte N.C., but I would be interested in feedback from others areas of the country as well.

Certainly this list is not scientific or the result of past reflection on future time travel, so weigh in!  Continue reading

Best Wishes For The Holiday Season And Some Things To Think About….

For this part of the year, REDD is celebrating with some trepidation (mostly caused by attorneys and accountants) the end of  2014 and  a bit of food for thought. To begin with, my apologies for the strained rhyming  below and if I have may have left some folks out.  But now, without further ado…

working during holiday 2

Twas’ the last days before the end of the year and all through every Landlord and Tenant house, people were tucked in their beds, not stirring and there was no mouse – or at least one that didn’t work without IT help:

1.  The budgets for 2015 were finished (we think) and put away with care,  for all of us to tussle over next year!

2.   The Tenants were flush with optimism over Black Friday and Cyber Week profits without dread; while Landlords dreamed of big Tenant gross sales like lollipops in their heads;

3.   The vendors were paid in full in hopes that all  begin fresh in the New Year, we think….Did we settle up with everyone and iron out all the kinks?

4.   TICAM estimates had been sent with care to every Tenant everywhere, for them to open and hopefully not despair.

5.    The accountants and tax folks have been presented with every necessary document and reporting (P.S. they work all week with keyboards a’ clicking!).

6.   Everyone was joyful for the year that had passed and 2015 to follow with great promises to last?   Landlord said : “I hope sales get you to the place you pledged you would be.”  Tenant replied: “how can I have a successful year with internet sales and no fee!”

7.   And as the Landlord lay a finger across his nose, the Tenants exclaimed  percentage rent ratios were too low!

8.   Franchisors sat in their command centers ready to react to their Franchisee’s reports on customer traffic and year end sales. By the way, do not forget your franchise fee and please, please no tall tales!

9.   Assignors sat back with good tidings to all,  hoping that their Assignees were kings of each mall.

10.  Brokers were huddled with their plans for next year; to make every transaction work perfectly clear.  Meanwhile as they looked at holiday meals, a fat man landed down the chimney with new deals!

11.    The Contractors opened presents with glee, hoping new construction or TI would be what they would see; or at least a major upfit.

12.  The Developers were also asleep in their beds, as new projects danced in their heads!

13.    The Investors were last ones to bed, no sense of magic stuck in their heads.  P&L statements were the main concern, so large profits could be earned!

And to all a good night, let none of you have a fright. May the New Year bring you good cheer and a prosperous year…..

Best Wishes and see you in 2015!

CO-TENANCY – What’s In Your Crystal Ball? (PART 2: Key Issues and Related Dilemmas)

asking 3

In the last post, we discussed the basic concepts and procedures involving  co-tenancy in commercial leases. We also threw out some questions about how all of this plays out in the current real estate environment.  This week, we will delve further into important issues for landlords, tenants and their lenders to consider when grappling with co-tenancy at the drafting stage and after the lease is signed. In addition, we will suggest some answers to the questions from last week…. Continue reading