Archive for lease back
Jan
08
Also, how likely is the owner of commerical property going to be willing to let one retailer share his space (possibly sublease) with another retailer for part of the year? I would like to open a retail store, but only want to have it open a few months out of the year and don’t want to have to pay for a whole year’s lease.
Rent Back Fast
Dec
25
Technological Benefits of Equipment Leasing
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Technological Benefits of Equipment Leasing
Technology provides a needed and powerful edge in business; the following points examine those benefits and let you decide how these benefits provide you with the needed edge in business. An equipment leasing arrangement provides you the edge you need without running the expensive costs associated with purchasing state-of-the-art equipment.
Wider Options, Lesser Costs - With an equipment leasing arrangement you are free to select your choice of equipment without paying the full price. This advantage also comes with the fact that most business equipment leasing companies will often handle everything from the maintenance to the deployment of their equipment. Your company can save the costs associated with the equipment as the leasing company usually gets price cuts on equipment and related services since they buy in bulk.
State-Of-The-Art Equipment - When a commercial equipment leasing company provides your business with equipment they provide the best. They do this because unlike your business, equipment leasing is the only business they do and their competition is steeped in proving you the best equipment at the lowest prices. If they don’t provide the best equipment at the best prices their competition takes over, so the company paying for leasing services gets all the related benefits of getting the best equipment at a cheap price.
Flexible Arrangements - With an equipment leasing arrangement, financing is according to your convenience. Financing can be arranged according to the way you intend to use the equipment and the cash flow of your company. You can also renegotiate the terms of your lease if your circumstances change and this comes without any repercussions. Some commercial equipment leasing companies also handle the insurance of their equipment so insurance costs for your leased equipment is not a problem.
Equipment Leasing Options
With the various equipment leasing companies available there is hardly a fixed set of leasing options. Companies will provide leasing options and tailor them according to the needs of their customers. In this equipment lease guide we have selected some of the most common business equipment leasing options available, which can be found across a variety of equipment leasing companies in the U.S. today.
The Capital or Finance Lease offers the lessee the option to buy the equipment at a much reduced rate at the end of the lease period. This equipment lease is also referred to in some quarters as a nominal buyout lease. With the Sale-Leaseback Lease the company buys the equipment it requires and sells it to the leasing company. The equipment leasing company can then lease the equipment back to your company or business for its normal use. The Municipal Lease option is available to public agencies as well as non-profit organizations. If your company falls into these categories you can make inquiries concerning this option. With the Deferred Payment Lease, the first monthly payments of such leases are usually deferred to a period of up to 90 days before the lease starts. With the Seasonal or Skip Payment Lease, the lessee pays for the lease at peak periods of the operating year, which are defined at his convenience. With the True Lease, the lessee may choose to return the leased equipment on conclusion of the lease or may buy the equipment at a fair market value price of the equipment. With the Graduated Lease, the leases start off with small monthly payments that rise according to the level of increasing income your business generates.
Rent Back Fast
Nov
20
Commercial Property Law Specialist
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Buying or leasing a commercial property today can become hassle free only when the buyer knows their property law well. Even they are not familiar with the latest news they need correct legal advice. Our commercial property department is experienced in dealing with commercial property transactions including sales, purchases, assignment of leases, purchases of businesses of going concern and sales and lease back transactions. We provide commercial property solicitors for various different sales. One can get expert advice only with a specialized property lawyer. For property transfer we provide a Conveyancing Solicitor too. At Duncun & Lewis we have been assisting landlords and their clients to run business in harmony without any litigation.
Normally, real estate agents in areas recommend commercial property solicitors who they know. They know the area and are knowledgeable about the laws concerning related properties. Many businesspersons try to reduce the hassles by trying to circumvent legal hassles by only relying on the brokers’ advice. The title of the lease or plot has to be clear. But the right option is to engage commercial property solicitors for it. When you approach a commercial property solicitor at our firm they will take into account the compete details before any sale or purchase or any other transaction is made.
Too much emphasis is being given on the protection of the tenants now. A new code was introduced for leasing business premises in UK in March 2007. Sometimes lack of knowledge and not giving due importance to property lawyers can land businesses in trouble. For every negotiation, we make sure that property conveyancing is done easily, with able assistance from a conveyancing solicitor. A conveyance is a deed (legal document) that conveys a house from the vendor (seller) to the buyer, thereby transferring ownership. For transferring the property in the name of one person to another especially in business premises requires legal assistance. We take it to our credit that we have handled successfully, many such cases.
Consider a commercial property solicitor from our firm as an insurance policy against bad decisions. Property owners today do not want long-term tenants and this could mean that some tenants will protest. Tenants whose business depends on the volatile markets tend to take shorter legal routes. The lease term is important and we are aware of the technical issues faced by our clients. We charge reasonable fees but make sure you remain in business. This is our priority. If are looking for knowledgeable commercial property solicitors or conveyancing solicitors, log on to duncanlewis.co.uk. Find a wealth of information here apart from the best solicitors.
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Rent Back Fast
Oct
02
I leased a Golf in 2003 and my lease expires in July 2007, the buy back is 13 000$. I dont know what to do? Should I buy it or lease another one? I have put a 2000$ downpayment and have 42 000 kilometers on it. Confused?
Quick Property Sale
Sep
25
Commercial Mortgages for Small Business
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By the word “mortgage” We used to have begun only recently: a relatively new concept for the Russian practice. If the mortgage housing is becoming more common, the commercial real estate mortgages - has only sporadic cases.
Mortgage commercial real estate or commercial mortgage (mortgage business), is widespread throughout the world. Western experience shows that with sound operation of commercial real estate - rental of premises for offices, shops, business services - its yield is comparable to any other area of small business and allows the use of mortgage loans.
The essence and conditions of commercial mortgages
Mortgage loan is granted for the purchase of non-residential premises: warehouse, office, etc. The meaning of the mortgage is to lend the purchase of commercial real estate under the same pledge. In contrast, housing loans, commercial mortgages are short term loan, but rather high interest rates.
Typically, the annual rates of commercial real estate mortgage loans range from 12 to 16%, mainly in the currency. The term of the mortgage real estate - a maximum of 10-12 years and the most common term - 5 years. Borrower must make an initial contribution of 25-40% of the value of real estate. In doing so, the client must be profitable and a minimum balance of the year on the market.
The legal nuances of commercial mortgage loan
The scheme of the commercial mortgage is similar to non-residential mortgage housing: there are the same procedures for assessing the borrower and the facility, the requirement of the initial deposit. But there is a fundamental difference - the law does not allow companies to draw up a mortgage on the property until the conclusion of the sale. The object must first acquire and then you can pledge to get the money.
An important legal aspect of commercial mortgages - the registration of ownership of non-residential premises, while mortgage encumbrance Federal law does not provide. The Treaty on mortgage commercial real estate is subject to general rules of the Civil Code of the Russian Federation on the conclusion of treaties, as well as the Federal Law “On Mortgage (mortgage). According to paragraph 1 of article 9 of the federal law in the contract of mortgage must be given to mortgage his assessment of substance, size and term of the obligation secured by a mortgage.
Who will benefit from the commercial mortgage?
Participants in the commercial mortgage market agree that the development of the mortgage business is constrained primarily loopholes in the law. However, it is not clear, and someone who will be the borrower, what is its quality. Reliable stable companies can take to acquire an ordinary commercial real estate loans on bail of any property, they do not particularly need a mortgage. And if the company has no collateral or banks do not consider it possible to give her credit based on the evaluation of such a company - why would need a mortgage borrower?
It is for this reason that Russia mortgage commercial real estate still is, essentially, for large companies. For small businesses do not have sufficient collateral. On the specific risks of small businesses overlap problem opaque commercial real estate market.
Commercial Mortgage Scheme
So, the existing legislation in respect of the mortgage business is not perfect. It defines and possible arrangements for the mortgage lending business. According to the law “On mortgage” for commercial real estate, as opposed to living quarters, is an entirely different mechanism of registration and registration of collateral. Therefore, the market has developed a number of ways to carry out this kind of transactions, enabling them under current legislation.
Scheme I
The conclusion of the sales contract. The seller receives a portion of their funds from the buyer, as well as the guarantee of a bank. Then the registration of ownership of the new buyer. Further, the registration of a collateral agreement, followed by the issuance of credit and final settlement. This scheme experts called the most complex and lengthy.
Scheme II
The buyer pays for pre-contract owner (the seller) of its own funds, and the seller receives from the Bank’s obligation to pay the missing funds in the event of registration of mortgage. Followed by registration of collateral on a bank and registration of all documents on the transfer of ownership of the new owner, that is, the buyer (the conclusion of a contract of sale), after which the seller receives the full amount, but registration is taking its course.
Scheme III
Realtors latest scheme called “Ransom entity.” A company, which is made out of real estate object (entity). Then the borrower to buy shares of the company by paying the loan. In doing so, the company arranged for the property.
Leasing - an alternative to commercial mortgages
According to experts, a good alternative business imperfect until the mortgage can become a commercial real estate leasing. In this case, the leasing organization - an analogue of a cooperative - gives credit for the purchase of the property and is the owner of the facility until the loan is not repaid. One of the advantages of leasing is that his arrangements clearly stated in the legislation. On the other hand, in case of bankruptcy leasing organization all of its property may depart for the debts of third parties, such as banks.
In any case, the risk is unavoidable. Banking experts advise entrepreneurs themselves to influence the terms of lending. According to most experts, the most urgent problem hindering the development of commercial mortgages, the low culture of the financing of small businesses. Mortgage becomes reality when the small business “Light”. The lower the tax culture of small business, the worse the conditions of mortgage lending for the same - the withdrawal of real market-mortgage business.
Real Estate Proffessionals
Sep
11
How can I lease my property for commercial use, preferably for Assisted Living?
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Hello,
I have a 2.5 acre property in Murrieta, California that I would like to lease for commercial purposes, but not sure where to go. Preferably, I’m interested in the field of Assisted Living. In other words, I would love to lease my property to a company that will make it an Assisted Living facility. But who do I talk to? Where do I go? I don’t want to run it, but to lease to someone who will.
Thanks.
Rent Back
Aug
21
Recessed Commercial Electric Lights
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Enhanced illumination contributes to a more positive and focused work environment in the office. It helps improve employee morale, and it contributes to increased productivity which can be vital to recession proofing a business. Of course, many businesses may feel that now may not be the best time to invest in a comprehensive overhaul of their interior lighting system. For such companies, commercial recessed electric lights offer an affordable enhancement to the existing general lighting system that represents a safe-bet investment in any market place and also helps to reduce liability and improve general safety.
A certain number of foot-candles are needed for clear visibility and safe mobility within a building. Pockets of shadow and low levels of light represent areas where employees can injure themselves or suffer from eye strain caused by insufficient light. Commercial electric recessed lights are ideal for improving illumination in these areas and increasing visibility so employees can more easily perform tasks and move between stations when necessary. Reducing work related physical stress and minimizing the risk of injury helps decrease the potential liability for an organization with substandard levels of lighting. Something as simple as installing a few commercial recessed electric lights can potentially qualify a company for reduced commercial liability insurance rates, provided the contractor who installs the recessed lights provide the organization with a photometric analysis that details the improved quality of interior lighting and shows where newly installed recessed light fixtures work provide new directional lighting for important tasks in key areas of human traffic and activity.
Recessed electric light fixtures are also an ideal source of accent lighting in commercial interiors. Meeting rooms and foyers are two very important places that every company should spend the money to literally put in the best possible light. Recessed electric fixtures in these rooms can be wired to dimmers and remote control unites that allow for the light to be set to appropriate levels for different events. Speakers, sales presentations, private meetings, and even video conferencing will all benefit from the enhanced and flexible illumination produced by commercial recessed electric light fixtures.
To determine fixture specifics such as housings, trims, and lamp types, it is necessary to quantify floor and vertical cube space, and to learn as much as possible about key activities essential to the client’s operation. This information can then be passed on to us so that we may process this data using sophisticated design software that generates a comprehensive photometric analysis of the client’s interior office space. This photometric assessment details a point by point, room by room breakdown of required levels of lighting and optimal locations for fixture placement.
Once these things have been determined, it is much easier to determine exactly how many recessed electric lighting fixtures are actually needed, and which housings, trims, and lamp types will best meet the requirements of the proposed installation. For ceilings that cannot be cut due to restricted clauses in the client’s commercial lease, retrofit recessed lighting fixtures may be the best way to go. Smaller companies who feel the pain of investing even in a few new ceiling lights can be reassured with the promise of lowering power bills with low voltage fixtures. Unique interior architecture such as sloped ceilings can also be accommodated with special recessed electrical light fixtures made just for such interiors.
Sell House Quick
Jul
17
Comparing Residential and Commercial Property Investment
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There are important differences between owning commercial property and owning residential property. Having all the information will allow you to make an informed decision.
There is more emotional involvement in residential property as it fulfills the basic function of providing shelter. If residential tenants are unable to pay the rent, even if the non-payment covers several months, you can’t evict them at will and rent the property to another tenant.
Residential tenants have the right to disagree with a rental increase by taking their case to the Residential Tenancies Tribunal. If they can show that an increase in rent would cause hardship, there’s a very good chance the tribunal will disallow the rental increase.
With residential properties the landlord is responsible for insurances, and maintenance and repair costs. The tenant is responsible for paying the rent, contributing to consumables such as water, heating and cooling, and paying for any damage to the property. However, the lease provides for ‘fair wear and tear’ for the length of the lease.
By contrast, leasing of a commercial property is a purely commercial transaction where emotion plays little or no part. Basically, there is no standard lease for all commercial properties and the terms and conditions are included in the individual lease documentation for each individual property.
The terms and conditions of occupation of a property by a tenant are recorded in the lease documentation and, once signed by both parties, are legally binding. In a well documented lease all aspects of occupation and operation of the premises are addressed. This includes the term of the lease, the level of rent, the basis of rent reviews, and who is responsible for operating costs, and repair and maintenance of plant and equipment, such as air conditioning, etc. Once these details are documented in the lease, only in extreme circumstances can the terms be varied.Unlike residential tenants, if a commercial tenant fails to pay his rent he can be readily locked out and any goods in the premises can be sold to recover the arrears in rent and the costs of the eviction.
Some commercial properties include a higher level of plant and equipment, such as air conditioning, fire prevention, security, etc. In a single-tenant building these costs are met by the tenant. In a multiple-tenancy building, such as a strata property, these costs are met initially by the landlord, but will be recovered on a pro rata basis from the tenants.
Most residential tenants prefer a short term lease that allows them the freedom to move. Common residential leases are for 6-12 months, with an option to renew the lease. Commercial tenants usually desire a long term lease that provides stability for their business. These leases can range from 3-20 years, depending on size and type of business.When a residential tenant wishes to vacate rented premises before the end of the rental agreement he can, with the consent of the landlord, secure a replacement tenant and, at that point, the obligations between the landlord and the original tenant are terminated for both parties. The landlord then has to rely solely on the guarantee provided by the replacement tenant.
In the case of a commercial tenant finding a replacement tenant – or sub-letting part of his leased area – the landlord has the protection of the incoming tenant, that tenant’s guarantee, and also retains the protection of the guarantee provided by the original tenant. The original guarantee remains in force until the expiry of the term of the lease agreement with the original tenant.
Most financial institutions will lend anywhere from 80-100% of the value of a residential property depending on market conditions. Loan approval on a commercial property will generally be in the order of 70% - 75%.
Financial institutions rely mainly on the financial strength of the borrower for residential loans, but like to see strong, long-term leases with commercial property investments. Here loan approval is far more reliant on the strength of the secure income from a sound lease than on the personal financial position of the borrower. Having a secure, well-structured lease in place on a commercial property can greatly increase your chance of securing a loan approval.
Knowing the differences between residential and commercial property investment is important in making a good decision on which type of property best fits your investment plan.
Rent Back
Jul
03
Introduction to Commercial Leases - Part 2
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In our last article we discussed: lease objectives, the common types of leases, what makes a lease enforceable, cash flow, expense stops, common area maintenance as well as the tax benefits of improvements.
As we move on in this article, we’ll discuss additional lease types and become familiar with lease additional clause, strategies and identify common terms used in commercial leases.
Ground Lease
A ground lease is as lease for land alone, and is typically a long-term net lease. Ground leases are where land ownership is retained by the owner of the land and improvements are owned by the tenant.
These leases can typically be found in areas with a shortage in highly desirable land, and may be traditional in other areas. Following the end of the lease term of a ground lease, title to the land and improvements reverts to the lessor/property owner.
Step Leases
Step Leases allow contracted rents on long-term leases to change by preset amounts or percentages which will occur on predetermined dates. These preset amounts or percentages are called escalations.
While the lease payments vary over time and the term of the lease, the actual payments are calculated and disclosed prior to the signing of the lease agreement.
The most common types of costs involving escalations may relate to real estate taxes, insurance, utilities, operations, and maintenance.
Real estate professionals representing the tenant can provide historical trend information regarding these types of escalation so that increases can be predicted and informed decisions can be made prior to a lease signing
Indexed Leases
Indexed leases are those where the contracted rent is tied to movements of a pre-specified financial index; such as the consumer price index (CPI). Here’s an example: If the current year’s consumer price index increases by 3 percent, then the next years lease payment will increase by 3 percent.
Additional lease clauses
Several other options and clauses are designed to protect the needs and concerns of the owner and tenants and should be negotiated carefully and with diligence.
Lease Renewal Options
Commercial leases often grant a tenant the ability to renew a lease for a pre-specified period of time following the initial lease expiration. However, the rate at which the lease may be renewed is specified in the initial lease contract. A renewal option is often of value as it eliminates the need for a tenant a new location for the business prior to the expiration of the current lease. Even though the tenant is not obligated to renew the lease, hence the term ‘option’, the tenant is not bound by the lease to remain and may decide to find another location for the business if either the business requires it or the tenant so desires.
Expansion and Relocation Options
As businesses grow, it is essential to that growth commercial leases provide a tenant the right to occupy additional space in the commercial structure.
The rental rate and specified period of this space should be negotiated prior to the initial lease signing. Often, the owner will agree to give a tenant the right of first refusal as space becomes available in the building. If additional contiguous space cannot be provided in a reasonable time frame for the tenant, an owner may agree to relocate the tenant within the building or shopping center within a specified time period. These additional lease clauses should be negotiated and worded carefully.
Financial impact of lease clauses
After a decision has been made to lease commercial space a commercial real estate specialist may be enlisted to prepare a financial report which quantifies the potential tenant’s lease costs and which compares and contrasts alternative leases.
As outlined previously, the final lease terms will be dependent on current local market conditions and the negotiation skills of all parties involved.
Before analyzing the financial implications that a lease imposes on a tenant we need to upgrade our vocabulary to include commonly used terms. These terms and definitions may vary from market to market.
Base (contract) rent: This is the specified, pre-defined contract dollar amount for periodic rent (monthly payments). Escalations are based on this amount.
Total effective rent: This is the base rent once it has been adjusted to include concessions, allowances and costs that will become the responsibility of the tenant (such as operating expense pass-through).
Total effective rate: This is simply the total effective rent divided by the square footage.
Average annual effective rent: This is the total effective rent divided by the total years of the lease term.
Average annual effective rate: This is the average annual effective rent divided by the square footage.
Cost analysis
Now that we have defined some common terms we are able to understand how to analyze the financial impact and actual cost of a lease:
From the tenants perspective
In many commercial leases, the base rent does not necessarily equal the effective rent. An in-depth analysis of this will include all costs to the tenant such as concessions, allowances and other additional costs.
Here then is a basic formula for calculating a tenant’s effective rent:
The base (contract) rent + (Additional Costs - Concessions and/or allowances) = The Total effective rent paid which will be paid by the tenant.
From the owner’s perspective
This same analysis is covered from the owner’s perspective and will also include all costs to the owner:
Here then is a basic formula for calculating effective rent from the owner’s perspective:
Base (contract) rent - (Net additional costs - Concessions and/or allowances) = The owner’s Total effective rent as income.
Alternative Strategies
We’ve seen how the negotiation of a commercial lease can not only affect a prospective tenants’ and owner’s cash flow but also how complicated the process may be. When a prospective site located and analyzed correctly, the site may or may not satisfy the financial requirements of a prospective tenant.
With that in mind, let’s look at some alternative strategies for commercial leasing:
Sublease
A sublease is a separate lease in which the tenant may lease all or part of the leasehold interest to another tenant while retaining liability for the property and primary lease to the owner.
There are however risks to subleasing which an owner may not be willing to accept. These risks include:
Re-lease risk: The length of time it will take to find a sublease is unknown. Rental rate risk: It may be necessary to sublease at below-contract rent. Tenant quality risk: It may not be possible to find a high-quality tenant. Lease-term risk: A sub-lessee may want a shorter or longer lease than that of the primary lease. Lease agreement risk: A sub-lessee may want concessions, allowances, and other features that are not provided in the primary lease. Tenant improvement risk: The sub-lessor may have to pay build out costs for the sub-lessee.
Assignment
An assignment of lease is where all of a tenant’s leasehold interests in a property are transferred to a third party. In general this will release the original tenant from any and all responsibility of the remaining terms of the lease at the time of assignment.
Build to Suit
Build-to-suit development as those in which an owner agrees to develop or finish a property built to the specifications of the prospective tenant.
The costs for the improvements may in part be assumed by the prospective tenant and may be in the form of an increased effective rent.
A build-to-suit strategy will most likely involve a prospective tenant with significant financial capacity and strong creditworthiness.
Sale-Leaseback
A sale-leaseback is a strategy in which an owner purchases land, builds a structure on the land for their own use and in turn sells the entire property to an investor, and retains a long-term net lease.
Many companies use this strategy to convert their equity in real estate to working capital where it hopefully can generate a higher return from the operation and cash flow of the business.
Summary
While this article, appropriate title Introduction to Commercial leases does not encompass every aspect of all commercial leasing implications, it hopefully has provided those with a less then working understanding of commercial leases the knowledge and information needed when dealing with a commercial lease entity.
There are many different ways to structure lease transactions, clauses and financial implications in commercial real estate leasing.
An important item to remember is that many lease clauses will be applied to a cost to either the prospective tenant or the owner.
Commercial leases should be reviewed carefully by trained professionals or others fully qualified to negotiate and analyze both the short and long term implications of the lease and the financial responsibilities of all parties concerned.
Careful and diligent lease negotiations and analysis will provide both a prospective tenant as well as an owner the ability to profit and be successful in their individual endeavors.
© Copyright 2008 Jennifer MacKay. All Rights Reserved.
Repossession
Jun
30
I have a fully repairing and insuring lease on retail premises.Over several years I have carried out repairs to the roof, but now requires a new roof.It was not new when I signed the current lease.Now the landlord wants to instruct a roofing company to install a new roof and expects me to pay the total bill.
Repossession
