NNN leased bank branch closing before lease expiration

[Benjamin Goodman]

Just found out that Santander is closing a branch I own with a couple of years remaining on their NNN lease. Anyone have experience with similar situation? With they continue to pay through the end of the lease? Will they offer to buy me out? If yes what would be typical. E.g. if they would owe $150,000 in rent and taxes will they offer me $100,000?

[Michael Flight]

Hi Benjamin, if it is a true NNN lease they are obligated not only to pay the rent, taxes and insurance but also maintain the building just as they would if they were in occupancy. If your lease requires them to do quarterly maintenance on the HVAC you should let them know you will expect the service tickets etc. Then sit back and relax and collect the checks.

They will more than likely offer you some money to walk away from the lease. 

Don't negotiate only on the rent. Make sure you add the taxes, insurance and a maintenance cost factor to the total number they would pay.

Next, does the lease require them to restore the premises to white box or only broom clean?

As a start to any discussions make sure they remove the safes, safe deposit boxes and any reinforced walls around the safe areas.  Those are insanely expensive to remove.

After you have added this all up that should be your opening bid.  Ideally you would settle on the Net Present Value of that total.  As a worse case get get the property gutted to bare studs, 6 months to 1 year rent and charges and some extra for TI for the next tenant.

We have bought portfolios of occupied and vacant bank buildings so have a little experience.  

Good luck!  I wish you much success in all your endeavors.