Delivering Bad News

Unfortunately for the last few years, I have had to deliver a lot of bad news to property owners.   With the economy in a deep recession, I have often had to tell people that there property has declined in value often as much as 40%.   Sometimes, however I get a little help. 

A property owner recently contacted me to ask about some property he has had leased for several years.   The present lessee has struggled to pay the rent and a potential buyer of the lessee's company contacted the owner to discuss a new lease. 

After reviewing the market around this property, I concluded that the market rent had declined by nearly 33% since the last lease on this property.   Although he would have liked to have heard that the market rate had not declined, actually the property owner was pretty happy with the news.   It turns out that the new prospective tenants had asked him to reduce the rent by 70%.

The advice for this property owner was to try to hold onto the tenant if possible but to target the new rent at the current market conditions.   Since the tenant was having problems paying the rent, I suggested that part of the rent could be done as a percentage of sales.   By setting a floor and a percentage of sales, the owners does share some of the risk however, the owners can expect to get near market rates and perhaps better than market rates if the store can increase its sales.  

Sometimes, fate steps in and makes things a little easier. 

Have a great day, all. 

Notes and Disclaimers and such -

BTW - If you know of anyone needing assistance with Real Estate, have them give me a call.  I specialize in Commercial Real Estate and handle Office, Industrial, Land, Retail and Investment properties.   I work with Buyers, Sellers, Landlords, Tenants and Investors.   Heck I can even find you help with residential real estate.

ALSO - I am sure that my managing broker would appreciate me clarifying that the views expressed here are my own and do not necessarily represent the view of Commonwealth Commercial Real Estate, its brokers, agents or employees (other than me, of course.)   If you have a question or a comment on anything here, you are free to make a comment.   However, you are not free to make inappropriate or offensive comments.   Should I find any such comments, I will exercise my right to delete them.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

ofc: (502) 379-6005
cel: (502) 905-5274
mailto:DMcCoy@ccre.biz
www.ccre.biz