Recently, Law360 published our colleague Andrew A. Dean’s follow up to his previous article, “Negotiating Exclusive Use Provisions in Retail Leases.” This new article discusses how to address “rogue tenants,” the enforcement of an exclusive and whether continuous operation clauses should factor into the exclusive use provision when negotiating a retail lease on behalf of a tenant.

To read the full article, click here.

 

 

We are thrilled to announce that our colleague Andrew A. Dean was published in Law360. His article focuses on the more frequently discussed provisions in a retail lease – the tenant exclusive. He covers his own experience representing retail tenants and explains the fundamentals of a tenant exclusive from the perspective of the tenant and the various considerations to provide a healthy and robust advantage over competitors within the shopping center setting.

To access the full article, click here.

The Financial Accounting Standards Board (FASB) is expected to finalize new lease accounting standards (“Standards”) within the coming months which will have very real consequences for owners and lessees alike. Under current accounting standards, a lease is classified as a “Capital Lease” or an “Operating Lease.” A capital lease is treated similarly to a loan; the asset is treated as being owned by the lessee and must be recorded as an asset on the lessee’s balance sheet. By contrast, an operating lease gives the lessee a right to use the owner’s asset without the requirement of including the lease on its balance sheet. The lessee never owns the asset and must return it to the owner after the lease ends. Most office building, retail, or other standard commercial leases are operating leases under the current standards.

The new Standards will, among other things, eliminate the above classification and instead classify most capital leases –including existing capital leases –as a “Type A Lease”, which will be accounted for in substantially the same manner as capital leases are accounted for under existing generally accepted accounting principals (GAAP), and most operating leases – including existing operating leases –as a “Type B Lease”, which will be accounted for in a manner similar to operating leases under existing GAAP, except that lessees will now be required to include lease obligations on their balance sheets increasing assets and liabilities. Shorter term leases, leases of 12 months or less, must also be included on balance sheet if, considering all relevant economic factors, the lessee is “reasonably certain” to exercise an option to extend the lease beyond 12 months. Continue Reading FASB Lease Accounting Changes

Leases often form the start of a long term relationship between a landlord and tenant. This dynamic is much more critical in the life sciences context, and the process of lease negotiation and implementation requires integration and cooperation between the landlord and tenant teams. The lease creates a roadmap for what can be a very long tenancy, and needs to be carefully thought through and negotiated.

Due to the higher capital infrastructure required for life sciences companies, lease terms are typically longer than other types of leases and the motivation to renew in place is much higher, so having a good underlying lease is critical. The following outline some of the commonly negotiated areas in life sciences leases: Continue Reading The Life Sciences Lease: A Marathon, Not a Sprint

Our colleague Steve Friedberg recently spoke at the ICSC Shopping Center Law Conference in Phoenix, Arizona on the topic of “Financeable Retail Leases: A Guide to the Perplexed”.  The seminar explored the requirements for creating financeable retail leases from the perspectives of landlords, tenants and leasehold and fee mortgage lenders. Five key takeaways from Steve’s presentation were:

  1. The users of these leases are generally national credit tenants who require control over the construction of their buildings through long-term ground leases (the term generally is at least 25 years, plus 4 or more 5 year renewal options—the term, including options, has to be at least 20-30 years longer than the term of a leasehold mortgage to satisfy rating agency requirements). Because of their credit standing, these tenants can build their improvements much less expensively than a landlord (and the landlord does not have the risk of construction and its cost). Continue Reading Financeable Retail Leases: A Guide to the Perplexed

We are seeing more and more of our clients branching out into international markets.  My partner, Dawn Saunders, wrote an interesting article about navigating international leasing transactions and the importance of having experienced international leasing counsel review these transactions. For example, experienced U.S. based attorneys have vetted and worked with local counsel. Additionally, they understanding key differences like how local contracts differ from contracts in the U.S. and how risk is assessed.