Description
Stay compliant and understand the key issues to consider in lease renewals.
This presentation will focus on the changing environment in lease renewals and lease amendments, both in the context of an option exercise and a negotiated lease renewal. Given the paradigm shift in vacancy rates and demand for space, tenants need to plan well in advance and avoid falling into the captive tenant category. The presentation will focus on the process of approaching lease renewal negotiations for each landlord and tenant, the due diligence needed to identify issues to be discussed, the nuances of the definition of fair market rent, and developments in compliance with laws, credit support, security deposits, energy efficiency and conservation, force majeure, and the use of improvement allowances that are impacting lease renewal negotiations.
Date: 2023-05-16 Start Time: 1:00 PM ET End Time: 2:30 PM ET
Learning Objectives
* You will be able to discuss the nuances of the definition of fair market rent.
* You will be able to explain the use of improvement allowances that are impacting lease renewal negotiations.
* You will be able to recognize the due diligence needed to identify issues.
* You will be able to review the process of approaching lease renewal negotiations for each landlord and tenant.
Why Focus on Lease Renewals
• Gives Parties the Ability to Address Issues Not Addressed in the Lease
• Gives Parties the Ability to Address New Laws and Allocate Responsibility for Compliance
• Opportunity for Remeasurement of RSF and to Reconsider Credit Support Matters
• Opportunity for Tenant to Obtain Concessions (Very Relevant in Todays Market)
• Opportunity to Adjust Rent and Extend Lease Term (a Blend and Extend)
• Opportunity to Obtain an Estoppel
When to Start Process
• Most Brokers Suggest Starting the Process 12 Months Prior to Date the Lease Term Expires or the Last Day Before a Tenants Right to Exercise Any Applicable Option to Extend Is Set to Expire
• What Does the Term Captive Tenant Mean and How Does It Relate to the Period in Which to Exercise an Option to Extend and the End of the Lease Term
• What Impact Does the Current Uncertainty in the Market Have on Lease Renewals and Modifications, a Tenants Leverage, and Timing
The Process Leading Up to a Lease Renewal and Lease Modification
• Are Brokers Involved and Who Pays the Broker Commission
• Is a Letter of Intent Used? Under What Circumstances?
• Make Sure to Check Existing Lease for Base Year, Floor Remeasurement, Calculation of Rent and Other Terms Applicable to an Option to Extend
• Determine If There Will Be Tenant Improvements and the Process To Do the Work While Your Company Is in the Leased Premises, Consider Swing Space, Consider Impact on Business Operations
• The Stay or Go Discussion
• Consider Needs of Existing Subtenants
• Determination of Market Rent in Option Exercise Scenario (Deep Dive Is Focus of a Different Program)
Role of Landlords Property Management and Listing Broker Teams
What to Include in a Lease Renewal /Lease Modification Agreement
• The Basics: Rent, Term, Base Year, and Security Deposit – Do You Still Have the Same Landlord and Tenant Parties?
• Is This an Exercise of an Option or a Lease Modification Agreement
• Read the Lease
• Will a Tenant Work Letter Be Required – How Extensive Will Tenant Improvements Be?
• Revisit Assignment Sand Subletting
• Obtain Reaffirmation of Guaranty
• Consider SNDA Even If Not Obtained in Original Lease
• Revisit the Boilerplate Provisions
• Consider Time Pressure and Deadlines
• Consider Market Conditions and Impact of Hybrid Work Schedule
Summary and Concluding Remarks
CLE (Please check the Detailed Credit Information page for states that have already been approved) ,CPE ,Additional credit may be available upon request. Contact Lorman at 866-352-9540 for further information.
Manuel Fishman, Esq.-Buchalter Nemer
