The United States economy has been in a recession since December 2007; foreclosures are rampant; the stock market has tanked; and businesses across America have experienced a dramatic slowdown. The financial markets are in chaos and most businesses are having extreme difficulty getting credit from banks and financial companies as a result of the lending crisis. As a result there is a desperate need on the part of businesses to solve their cash flow problems with non-traditional solutions. One such alternative that is happening across the country is the restructuring of leases.
Lease restructures are not a novel concept. Historically they have been utilized in times of expansion such as the 1980s. But more often they occur in times of trouble like we are experiencing today. Lease restructures became popular during the Great Depression of the 1930s and again during the recession of the 1990s. When the current leasing market rates are out of synch with the existing rent rolls as they are today, the restructuring solution becomes viable.
The lease restructure solution provides benefits to both landlords and tenants in tough economic times. The benefits to the tenant may seem more obvious: lower rents; reduced space; more favorable terms and conditions; landlord paid improvements; and, the deferral of rent and lower expenses to free up cash flow to get the company through the tough times. Less obvious are the benefits to the landlord: avoiding loss of a tenant and complete loss of revenue; avoiding the costs associated with re-leasing and retrofitting such as spending on improvements and commissions; generating sufficient cash flow to avoid foreclosure; avoidance of tax recapture problems; and the enhancement of the Property’s image.
Since 1980, the lawyers at Gross & Romanick, P.C. have with written, negotiated and edited Leases, Lease Amendments and Addenda for clients throughout the United States. During the past year the law firm has been actively involved in assisting with the restructuring of leases for both landlords and tenants. It is critical to the success of a lease restructure that the document memorializing the agreement be carefully and properly drafted to accomplish the goals of both parties. The lawyer can help determine whether the document(s) should be an amendment or modification to the existing lease or a completely new lease with supporting documentation such as promissory notes.
Whether you are a landlord or a tenant, each side must recognize each other’s position and the reasons why a lease restructure may or may not make sense. The goal of a lease restructure is to accomplish a mutual benefit. The attorneys at Gross & Romanick, P.C. will help you identify the critical issues so that a restructure, if appropriate and feasible, is a win-win for everyone in these tough economic times.
Gross & Romanick, P.C. is now accepting collection cases.
Landlords! Is someone occupying your premises without paying rent? Gross & Romanick, P.C. can help you evict your bad tenants. Contact Us if you need assistance regaining possession of your Premises.
Tenants! Cash Flow problems? Rent out of proportion with the market rate? Need to Downsize? Gross & Romanick, P.C. can negotiate a Lease Restructure with your Landlord. Call us today at (703) 273-1400 or visit our website: www.gross.com.
