RESTRUCTURING RETAIL & OFFICE LEASES IN A COVID-19 WORLD

Tenants and Landlords party to real estate leases are experiencing unprecedented disruption to their businesses activities as a result of economic disruption caused by the COVID-19 pandemic. Property lessors across all asset classes, faced with severely reduced revenues, are under increasing pressure to restructure their rent obligations to ensure business survival. Landlords, faced with defaulting tenants and the prospects of extended property vacancies, are under similar pressures, to retain occupancy and preserve asset value.

Knowing the ins and outs of lease restructuring, what the law and your documents permit, what rights you have, how to approach negotiations and assess structuring alternatives, and how to best effectuate a successful restructuring for all parties involved is crucial.

Arcturus is actively working with both tenants and landlords to help fully dimension the risks and opportunities associated with their existing lease liabilities/assets, map out objectives and tactics, and support our clients through their lease restructuring activities. Now is a critical time for your business to have a full understanding of its situation and the risks and opportunities at stake.

KEY LEASE RESTRUCTURING ISSUES TO CONSIDER

  • Deferral, abatement and termination analyses
  • Force majeure, material adverse change, impossibility, frustration of purpose, casualty, condemnation, interruption of services and other legal provisions
  • Eviction rights/procedures
  • Landlord performance requirements (property access, notice, use limitations)
  • Lease guarantee and credit support evaluation (liquidation, retention, recovery)
  • Negotiation strategy/tactics
  • Percentage rent, earnouts and other contingent rent structures
  • Legislated forbearance options
  • Business interruption insurance
  • Accounting impact
  • Real estate tax impact
  • Reporting/communication requirements
  • Litigation assessment
  • Unintended consequences

Arcturus understands the critical issues facing both tenants and landlords in today’s unique economic environment. We have a strong team, with deep experience in helping clients get a clear understanding of their unique situation, outline alternatives and strategies to address problems, and successfully restructure lease obligations to preserve/create value.

Please contact Arcturus so we can maximize the ability of your business to weather this storm and be best positioned for future success.