Anyone experienced in leasing to financial institutions?

Question

I am negotiating the purchase of building previously occupied by a financial institution (bank). The seller is the bank that is moving. They are moving to a newer larger location. The seller (the bank) will sign a 6 month NNN lease and leave the property unrestricted so a future bank could move in. My plan is to lease it to another bank/financial institution. The seller (the bank) wants to take with them at the end of their lease below. Does anyone have so experience leasing to financial institutions and can give me an idea on what to look out for? I am initially most concerned about vault, atm, and VAT system. It seems that a bank may bring their own atm, video, and tech equipment. It seems unreasonable to me that they would take vault components and VAT system.

1. Video Sysems: interior and exterior cameras (15) and 1 FDIC camera

2. Vault: under counter trays/stations, KABA axcessor lock, CVO

3. All data equipment and technology equipment

4. ATM

5. Safe deposit boxes

6. Night drop

7. VAT system: 2 hamilton air units (including ductwork) 1 diebold drawer

1. Video Sysems: interior and exterior cameras (15) and 1 FDIC camera

2. Vault: under counter trays/stations, KABA axcessor lock, CVO

3. All data equipment and technology equipment

4. ATM

5. Safe deposit boxes

6. Night drop

7. VAT system: 2 hamilton air units (including ductwork) 1 diebold drawer

Ronald Rohde · Answer

I would negotiate on condition and return to a shell. They are taking the equipment, but the next tenant is just going to bust open the drywall anyway. Take some money and hold it for TI on the next lease.

Eric Weireter · Answer

VAT System Removal - the invasiveness of the removal depends... is it underground or overhead? When you say removal, I picture them taking the brains (interior/exterior equipment/stands) of the operation, not the guts (duct). You could include in your contract that they have to have a licensed contractor repair any damage created by the removal of such desired equipment.

Equipment costs:

***ATM - depends if it is a thru-wall ATM or an island ATM, among other factors including the operating system, how much cash does it hold, is it a video teller, etc. I recall ours ranging from $20k-$35k.

***VAT - again, depends on multiple factors... above ground/below ground, video teller, number of drive-thru lanes etc. I recall ours ranging from $15-25k.

***Undercounter Steel (Cabinets)... these come in multiple sizes, that sit under the counter. I'd say a good estimate ~$2k, but with the number of bank properties on the market, these could be purchased on the secondary market much, much cheaper. A quick Google search pulled up a site selling 10 cabinets at $250/each. Now, if you're looking for an undercounter safe... that would be $5k-$10k.

Tomas Baxter · Answer

Thanks Eric. In your experience is the removal of the VAT system (ductwork included) an invasive process that damages the interior/exterior of the building? In my mind I see trenched asphalt and busted drywall. Can you think of anything I should put in my contract to protect since they are removing this at the end of their 6 month lease (after I have closed on the purchase)?

Are you able to ballpark any equipment budget numbers?

Thank you!

Are you able to ballpark any equipment budget numbers?

Thank you!

Eric Weireter · Answer

@Tomas Baxter - I wouldn't get caught up in those items. Their request seems pretty reasonable to me. When I managed 30 branches across 4 states here in the Southeast we had our building equipment standards that we would implement at each location. So, when we would open a new location in an existing bank we knew there would be an "equipment" cost because we wanted to install the same/similar equipment across the portfolio... as it would help our support staff train new CSRs and troubleshoot any issues across the portfolio. Even if they were to leave the equipment you're most concerned with (under-counter vaults / ATM / VAT) there is a maintenance cost that goes along with them. If you were to deliver the space to a new financial institution your lease may/or may not say you have to deliver the equipment in working condition. It may be easier to let the seller take the items in question and have the new financial institution install their own so that none of the responsibility would fall back on you.

Anyone experienced in leasing to financial institutions?

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