- Tenant is wood worker. His lease is through October of 2024. He also sublets to a couple of month-to-month tenants we did not approve (but no troubles to date).

- Tenant pays VERY little rent. ROE and cap rate is 1.5% to give you an idea of how VALUABLE this sale would be to us. (We would 1031 and leverage into something bigger with MUCH better returns).

- Buyer is an art school. Wants to occupy building on close in 3-4 months. INSISTS tenant is vacated on close. We have not signed the contract yet, but there is a $35k penalty to us if we can't get the tenant out upon close. (Other terms: 60 day due diligence, 30 day close with option to extend additional 30 days).

Problem & Attempts to Solve:

- Tenant found a building to buy from a friend at 1/3rd of market price, but he would need to get a change of use approved from the city of Portland which could easily take 6 months and so doesn't work with Buyer's timeline. (Tried to get him to look at buildings to lease as well but because he is so far below market on current rent, everything is too expensive).

- We offered tenant $100K to sign an agreement that says he'd move on 30 days notice, with payment at close of sale.

- He said no. Said he can't close down his business if he doesn't have a building to move into. Countered with 30 weeks notice and buyout of remainder of his rental payments owed ($83k as of today).

- 30 weeks doesn't work with Buyer's timeline. Asked Tenant if he'd consider 5 months notice. He said 5 months wouldn't work.

- Also told tenant that we might reconsider his sub-tenants if this deal falls through and require he find tenants at market rent so we can gain the upside to make up for his below-market-rent. He either didn't understand or doesn't care. Said he would consult his attorney if needed.

About to Lose a Killer Deal to Sell Our Building B/C Tenant

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