Recently, I was working with a tenant whose entertainment-based business was doubling year over year. He needed to move out of his 4,000 square foot space and find something around 12,000
square feet to facilitate contracts that were coming down the pike from major entertainment companies and studios.
We found the perfect building in the perfect location and lobbed a reasonable offer in to the landlord. We were making progress negotiating terms but when the landlord looked at the
tenant’s financials we hit a snag; well, more than a snag – a brick wall. The landlord was concerned over the tenant taking on rent that was triple what he was currently paying and demanded a huge security deposit to offset what he perceived as the risk in leasing his building to my client. The up-front cash demand killed the deal.
My client was extremely disappointed. This is understandable but I explained to him that I have successfully navigated negotiations for tenants facing greater challenges:
- I had a client who had a recent bankruptcy on their record that would have
cut off discussions with many landlords. I coached them to present a story that explained how their recent financial troubles were unrelated to the business that would be operating in the space and paying rent. We got over the hump and negotiated a very fair deal for them.
- I had just finished
negotiations on a 10 year lease of a surface parking lot in an upscale Westside commercial district for a client who was an immigrant from south Asia and who had just become a citizen of the U.S. While he had several years of experience in the parking lot management industry, he didn’t have two nickels to rub together. We got the deal done – with a sophisticated landlord, no less – without providing any financial statements whatsoever. The tenant did have to pay an enhanced
security deposit but I negotiated terms that will get most of it refunded to him after the first couple of years of the lease.
Tenants with less than stellar financials will occasionally encounter a very skittish property owner but there are others out there that will be much more open to leasing to a
promising business.
