Commercial Landlords Tilt the Playing Field Against Tenants under New Bankruptcy Law
August 31, 2005
The changes in the coming bankruptcy law (effective Oct. 17, 2005) are certain to be welcomed by commercial landlords who are given new advantages when tenants file for bankruptcy. Landlords will have new ammunition to control the disposition of premises and to ensure prompt performance of lease obligations. The new law already has landlords and tenants rethinking their strategies, both in the leasing stage and post-bankruptcy. Because the law is subject to significant uncertainty in its interpretation and function, however, only time will tell how the changes play out.
What's in a Name? All 'Ground Leases' Are Not the Same
August 31, 2005
The term "ground lease" may be used in connection with shopping center development in two ways. In some deals, the developer of the shopping center leases the shopping center land from its owner and develops the shopping center on the leased land, building store buildings and leasing space to the actual users (a "development ground lease"). In other cases, the shopping center developer owns the shopping center land and leases an unimproved portion of the shopping center (usually a "pad" or out-parcel) to a tenant who will build its own building on the leased land and operate a business there, such as a fast food restaurant, drug store or bank (a "retail ground lease").
Using Letters of Credit to Secure Lease Obligations
August 31, 2005
For a relatively small fee and assuming sufficient collateral or creditworthiness of the tenant or a guarantor, a tenant may be able to apply for and have its bank issue to its landlord a letter of credit ("L/C") to secure the tenant's obligations under a long-term lease. If the L/C is large enough, the landlord may enter into a lease with a tenant that the landlord would otherwise refuse due to the tenant's lack of creditworthiness. From the tenant's perspective, an L/C may be preferable to a large security deposit. An L/C will not necessarily tie up large amounts of the tenant's cash or other liquid collateral, as would a security deposit. Instead, the cash can be deployed as working capital in the tenant's business.
The Leasing Hotline
August 31, 2005
Highlights of the latest commercial leasing cases from around the country.
In the Spotlight: Secure Your Premises and Keep Employees Safe
August 31, 2005
How does a public place of business create a secure workplace without feeling like a prison in lockdown? There are several approaches to security. The first thing to consider is the area you want to protect. For example, installing safety film on windows helps to protect against injuries in the event that the glass shatters. In addition to the obvious threat of doors/entrances, the mailroom is an important point of access (remember the anthrax?). If you think your business may be a target, you could consider scanning the mail and having a separate air handler in the mailroom to contain any incident.
The Leasing Hotline
July 28, 2005
Highlights of the latest commercial leasing cases from around the country.
Restrictive Covenants in Commercial Developments
July 28, 2005
Recorded restrictive covenants in commercial developments present many issues. Two important factors to consider when granting such covenants include: 1) the reoccurring impact that they may have over the life span of a shopping center, and 2) the potential impact of such covenants on the current and future objectives of landlords and tenants who are parties to them.
In the Spotlight: What Every Tenant Should Know About Negotiating Parking Privileges in Commercial Leases
July 28, 2005
Designated, reserved parking spaces appurtenant to office leases are highly valued by certain types of tenants, especially in the downtown, metropolitan markets. Thus, a tenant's counsel must carefully consider the parking provision when negotiating an office lease. Landlord-oriented form leases often give the landlord the right: 1) to expand or change any parking area, 2) to temporarily close off portions of the parking areas for purposes of expanding, repairing, restoring, constructing or reconstructing the parking decks, and 3) to change, from time-to-time, the rules and regulations with regard to the parking area. The tenant's counsel should always make sure that the lease properly limits these rights so that they cannot be used in a manner that will potentially, adversely affect the tenant's use of its parking rights. All new rules should be limited by a "reasonableness" qualifier, and the landlord should be required to enforce the rules and regulations in a "nondiscriminatory manner as against tenant."
