Movers & Shakers
News about lawyers and law firms in the commercial leasing industry.
Leasing Covenant Loopholes
Protecting the success of its business is of prime concern to any retailer client in the course of shopping center lease negotiations. A protection commonly found in leases is an exclusive use right granting a tenant either the exclusive right to sell a particular product in a center or the exclusive right to operate a particular business. An exclusive right in a lease is violated any time an occupant of the shopping center fails to comply with its restrictive terms. As such, it places a burden on the landlord to administer and police a tenant's exclusive throughout the term of the lease. Landlords have, therefore, started to move away from granting exclusive rights to giving leasing covenants ' a provision intended to give a retailer the protection for its use while removing the administrative burden from the landlord in enforcing exclusives. However, is the retailer really getting the benefit of protecting its use from future tenants? Below are some considerations to keep in mind when drafting a leasing covenant for a tenant.
Information Security Breaches: Privacy Laws and Procedures
In the good old days, security concerns of tenants could generally be laid to rest simply by recourse to a good locksmith. In those simpler times, and without any association with security matters, landlords and property managers routinely gathered from tenants social security numbers and other information for purposes of protecting the landlord's interests when it came to tracking down miscreant tenants. Because this type of information was not subject to the widening panoply of privacy-related laws that are now becoming ubiquitous across the United States, no special arrangements were typically considered necessary to protect this information, and there was no particular risk or burden imposed on its holder. How things have changed. Nowadays, holding this type of information can constitute a double-edged sword, with any slip carrying with it the possibility of harm to the wielding hand.
In the Spotlight: Limiting the Impact of Co-Tenancy Requirements
A co-tenancy requirement may have substantial negative effects, including a domino effect if more than one tenant ceases to operate. Most landlords resist giving such rights to a tenant, especially an in-line tenant. However, if an important tenant has sufficient negotiating leverage, a landlord may be forced to roll the dice, agree to a co-tenancy requirement, and hope that the designated co-tenant will continue to operate during the term of the benefited tenant's lease. This article focuses on ways a landlord can limit the impact of co-tenancy requirements.
Balance Sheet Management for Corporate Lessees
Operating leases are becoming increasingly important to many corporate lessees for a variety of reasons. The primary reason a corporate lessee prefers operating leases to capital leases is for balance sheet management reasons. Operating leases, or 'true leases' — as opposed to capital leases — reduce the lessee's outstanding debt recorded on the balance sheet, which results in a better debt-to-equity ratio. The other motivations behind the corporate lessee's preference for operating lease treatment vary. For example, many corporate credit facilities have covenants preventing corporations from creating debt, which usually includes capital leases. Also, many companies want to preserve current lines of credit and cash for other ventures, such as the acquisition of a new business line.
In the Marketplace
Highlights of the latest equipment leasing news from around the country.
