All Forum Posts by: Jean H.

@Joel Owens thanks for the reply. Yes I'm based in Seattle but what I really need is a lawyer that's familiar with absolute net leases and specifically leases for this corporate. There are several for sale listings on Loopnet etc. with this client as tenant and it wouldn't be hard to get a copy of one of their leases. 

What I want to know is what the process, procedure is like when getting into the LOI/lease negotiation etc. Does the landlord typically draft the lease or does the tenant draft one up first?

Hello - can anyone here recommend me an good attorney at reasonable rates for a Single Tenant Retail lease? I am currently in the process of negotiating (as a landlord/developer) either a ground lease or buit to suit type of lease with a large corporate gas/convenience operator and am in need of someone that has experience with either types of leases as well as dealing with gas/convenience store corporates. Thank you!

Hello - can anyone here recommend me an good attorney at reasonable rates for a Single Tenant Retail lease? I am currently in the process of negotiating (as a landlord/developer) either a ground lease or buit to suit type of lease with a large corporate gas/convenience operator and am in need of someone that has experience with either types of leases as well as dealing with gas/convenience store corporates. Thank you!

@Joel Owens @Adrian Chu Great, thank you both very much for the input.

@Joel Owens - in terms of IT, my 150 per sq ft for construction cost estimate takes into account 20-30 per sq ft for TI. Nothing facy in terms of construction. Does this 150 all in figure seem reasonable enough to attract national tenants?

Our site is already zoned commercial and retail development is allowed so we are go to go on that front.

At what point should we start pre-leasing? Once we've acquired the site or when we're still in the DD period under the PSA . Is it legal to market a property prior to closing a transaction? And I assume we should have initial drawings / blueprints of the project to send to clients via brokers correct?

@Joel Owens @Adrian Chu Outside of development costs, our other main concern is whether or not we could get the rents required to get to the ~9-10 cap break-even point. Currently retail rents in the area are on average 18-22 NNN a sq ft. All else being equal, we think our site should deserve a premium to this market rates given its new construction and a prime corner site with little competition immediately nearby and high traffic counts (~35-40k VPD). We are targeting at least 24-25 NNN per sq ft - does this seem feasible given my points above?

Thanks again guys - this is very helpful

Hello - wanted to get some basic input on estimated costs for retail strip mall development costs with the following preliminary details:

-Area: Seattle / Tacoma area, suburb with ~35k traffic counts past the lot

-Land Size: 1.3 acres

-Building sq ft: ~12,000

-# of tenants/spaces: 6-8

-Land shape: Sligltly sloped

What I'd like help with is to understand the major costs associated with such a development. I'm new to this but from my research and from speaking with people, I was able to come up with the following estimate:

Land Acquisition: 1,260,000

Site Improvements: 200,000 (i've heard that site improvements for raw/undeveloped land will cost you around 100k-150k per acre - not sure if this is accurate)

A&E Fees: 150,000 - 200,000 (6% of total project cost)

Building Permits: 50,000 (not sure if i'm close to being accurate)

Construction Costs: 1,800,000 (150 sq ft) for a fully built out multi tenant building / 1,200,000 (100 sq ft) for non built out multi tenant building

Total Cost: 2.9 million / 3.5 million (fully built out)

Am I on the right track in assessing costs here? Are there any major ommissions from a cost perspective?

Would appreciate any input. Thank you very much!

Hello - wanted to know whether it's common for real estate agents to find wholesalers buyers.

I have a situation where I'm working with a broker to purchase land for what I think is a bargain price. My plan is to get it under contract and then search for buyers. Only issue is I don't have a list of buyers to go to so I wanted to hire a separate broker (different than who I'm using to get the land under contract) that specializes in finding overseas buyers.

Is this a good strategy? And more importantly, is there anything restricting my new broker for marketing this property again at a different price?

Any input would be much appreciated.

Thanks!

Thank you Joel, this is very helpful!

Is there a commercial real estate attorney you'd be able to recommend?

I really think the only 'out' the current tenant has is that the lease says they can assign the lease to an operator/franchisee that is approved by the corporation.

So if the current tenant assigns the lease to the new franchisee, my view was that the new franchisee wouldn't be able to form a new entity and stick my friends restaurant in there (perhaps with other stores operating at a loss) rather than the new franchisee's larger entity/portfolio.

I recommended considering reducing the rent a bit so that the stores rent to sales ratio is in a healthier position, but not the full amount they were requesting. In addition, I advised him to ask the new tenant to extend the base term of their lease and provide a clause saying they can not assign the lease, even to an approved operator/franchisee, without the consent of the landlord for half of the remaining base term of the lease. I thought this would help offset the decrease in value of the property caused by any reduction in rent.

Would like to get your thoughts on the recommendation above.

Thanks again for all the great advice you provide on BP!

Hello -

A friend that's part of an investment group owns an absolute net leased property occupied/leased by a national fast food chain operated by a franchisee that operates ~150 restaurants under several different entities. Issue is that the store is underperforming and the current tenant/franchisee is selling the business along with ~80 of their other stores and assigning the lease to another operator. They are allowed to assign their lease under the contract.

The would be new operator/assignee is larger than the current tenant and one of the largest fast food franchisees in the world in terms of stores operated and their properties sell at strong cap rates. If this franchisee assumes the lease, it should be a positive.

Issue is that they have asked my friend for a rent reduction as the rent to sales ratio for that particular store is low. They have threatened to create a new entity and throw my friends store into that entity rather than putting the store in the larger/stronger credit entity. I assume they would declare bankruptcy on the new entity and close my friends store down.

My questions for this situation are: 

1. Is it common for fast food tenants that are assigning leases to ask landlords for rent reductions?

2. Can the new tenant/assignee stop making rent payments at any point in time and/or declare bankruptcy without having their larger/stronger credit entity be liable in any sort of way?

3. The current lease has a personal guarantee provided by the owner/president of the franchisee/current tenant however this expires soon. There is also a guarantee that is substantially longer provided by 3 entities owned by the owner/presidents holdco. These entities also operate fast food restaurants. Issue is my friend does not know whether or not the restaurants held by the entities will be sold off in the same transaction or another. If they are sold off, would the guarantee still stand? If not, how would it be possible to ensure a similar guarantee?

4. What is the best way for my friend to protect himself?

Any input would be greatly appreciated. Thank you very much in advance!

great thank you Joel. this is helpful. 

thank you very much for the input. will further look into this

lot is not in Seattle. in a suburb south of Seattle