Any commercial leasing experts?

Paul T · 01-21-2006, 06:58 AM

I've spent the better part of 2005 negotiating to buy a local business and everything is in place, financing, licences (it's a state regulated business) except the lease. There are 8 yrs remaining on the lease and it's a boilerplate lease with the standard "assignment will not be unreasonably withheld" clause.

So here I am, I've been negotiating with the leasing "agent" since the absentee landlord, who lives several states away, refuses to talk to anyone. The "agent" to put it bluntly, is a lying, deceiving little prick. For 2 months now, it's been nothing but unanswered phone calls, delay tactics and vauge, conflicting reasons for why the landlord refuses to assign the lease to me.

First, he said my finances were not in order, which I think is absurd. When asked, "what is not in order and what more would you like to see?", I got nothing. He doesn't know, "let me get back to you". Second, he said the business broker (who works for the sellers, not me) lied to him. I'm beginning to wonder if there is a second agenda here (ie., he's trying to make me go away and sabatoge this deal so HE can buy the business). For thier part, the sellers are starting to piss me off also - they are clearly fed up with the way things are going, yet don't seem to be fighting much with the landlord. Sales are actually up nicely since we signed the agreement of sale and I wonder if they are having second thoughts.

My attorney is handling the matter now as of a couple days ago and so far the"agent" has not returned his calls. In speaking with another attorney, I've heard that these "unreasonable assignment" cases generally go either way in the courts and it's not worth fighting. I only have a few days left on my loan commitment and I think this entire deal is going down the tubes because of this - I'm so mad I can't see straight. Oh well, end of my rant - if anyone has had similar experiances, I'd love to hear them. Thanks!

campbellcj · 10:17 AM

The landlord of my wife's office and yours should get together - they sound like a perfect pair! Same deal - owner is absentee on the opposite coast and the local agent/manager is her evil beotch sister!

I know it's not the advice you probably want to hear, but if it were me I'd serious think to myself -- do I really want to subject myself to this dickwad landlord and his agents and lawyers for the next 8 years??? (Or longer, if you are in the business for the long run and it's not easily relocatable.)

The space we got is so prime and the timing worked out perfectly, that it was the right choice (plus we didn't fully realize the issues with these individuals until after signing and starting buildout) but seriously there have been times when we felt like calling cousin Guido to pay a midnite visit to the landlord. More than 3 yrs to go and I'm praying there are no more conflicts.

In contrast, the landlord of my office space is a big REIT (REALLY big now, just bought by GE). When we moved in, the property was owned & managed by a small family firm, which had its plusses too, but then you're dealing with individual personalities vs. corporate bureaucracy and "Borg" mentality. After dealing with both types, I think I prefer the professional corporate landlords now! They may not offer the same personal service, but the service they do provide is damn consistent and predictable.

Paul T · 01-21-2006, 10:26 AM

Good points - I have wondered if I want to subject myself to this guys quirks going forward, ptoblem is, this business really has to be located more or less where it is - and there is nothing else available in the area. The way it is looking, this deal will evaporate to nothing by the end of next week so it won't be an issue. I can't beleive it's all going to end because of this - and I thought the financing would be the hard part, that was easy!

I WISH the property was owned by a REIT or other, at least I could go to the top of the ladder and hope to get someone that was not insane. The agent and the landlord here are pretty tight and have been working together for years so I'm out of luck.

competentone · 01-22-2006, 10:44 AM

Quote:

Originally posted by Paul T
I'm beginning to wonder if there is a second agenda here (ie., he's trying to make me go away and sabatoge this deal so HE can buy the business).

It's probably the case that the value of this property has risen significantly in the past few years. A new lease would bring a lot more money to the property owner (and managing agent) than the current one. The property owner could want to sell the property too and wants out of the lease so a potential buyer of the land could do with it as he chooses. (Have you asked about buying the property?)

Is this a business that relies on its current location to be successful? Could you negotiate to buy the business without the lease and relocate it?

Paul T · 01-23-2006, 07:52 AM

The location is highly paramount to the success of the business and it's in a strip mall - the building is not for sale nor could I afford it if it were. The "agent" and I had several heated discussions over the weekend and I've decided to let this one go. Yes, theoretically I could move the business, but I would not be able to hold onto my loan commitment and the state licenses that are required (alcohol sales) for the time it would take me to move. Some deals just aren't meant to be...