Relevance of lease guaranty in retail space

[Nikolas Engel]

Hi BP community  - I need to draw on your knowledge and experience again. 

I am confused about the relevance of a lease guarantee in the lease agreement. If tenant goes out of business, he still owes rent for the remaining time of the term - so what extra security does a guaranty provide and how does it play out in practical real life situations?

How important is a lease guaranty for you when negotiating a lease agreement with a retail tenant?

In our current negotiation with a tenant on a ten year retail lease agreement, tenant is offering two year guaranty and a rolling 12-month guaranty thereafter.  What do you think about that proposal and is a rolling guaranty something that is usual business practice? 

Thank you for your support! 

[Nikolas Engel]

Thank you Ronald!

In this case, a franchise is being set up by the mother company and will be sold after some time to the franchise partner. I believe that is why they don't want to take responsibility after it has sold the business and assigned the lease. Of course, we could request that they stay on the lease as a guarantor when the lease assignment comes....

Yes, the rolling 12-month guaranty means in this case, that the rent in the next 12-months following default day are guaranteed. That could apply to any time in the ten-year lease term.