Brian Weld, Executive Managing Director, Global Brokerage of Cushman & Wakefield, offers the following information and advice regarding commercial rent relief. Brian has also offered to provide consultation to anyone in need of advice and guidance and may be contacted at [email protected]
Following are the four critical components of a well thought out rent relief request. 1 - The percentage of the rent reduction. 2 - The duration of the reduction period. 3 - The commencement of the repayment. 4 - The duration of the repayment period.
- The reduction which tenants have been typically requesting is between 25% to as high as 75%. We are seeing reduction periods ranging between 2 to 6 months.
- The repayment commencement is either at the end of the reduction period or a few months later. The repayment period is between 4 and 12 months.
- Many tenants have large security deposits being held by landlords. It may also be possible to defer rent payments and ask the landlord to draw rent payments from the tenant’s security deposit. This would need to be coordinated with the respective attorneys to issue a one-page amendment to the lease agreeing that the draw-down of the security deposit does not trigger a monetary default.
Obviously, the optimum result is a rent reduction period with no repayment plan. This can be a starting negotiation point, but we have seen limited success with this strategy since many tenants are eligible for the CARES program.