Consider Short-Term Lease Workouts For Commercial Tenants

Construction worker passing keys to new tenants

Commercial tenants throughout the country are going out of business, temporarily closing, curtailing operations, laying off employees and suffering sharply declining revenues.

August 17, 2020
Steven Ostrow, C. Jason Kim & Patrick Haggerty - White and Williams

The COVID-19 pandemic is adversely affecting commercial real estate as it continues to wreak havoc in industries throughout the economy. For many years, the primary declining CRE sector has been brick and mortar retail stores. However, the retail sector is no longer suffering alone, as the COVID-19 outbreak is hurting most other CRE sectors: office, hospitality, multifamily, restaurant, personal services, entertainment and construction.

Federal, state and local governments have ordered business shutdowns and social and travel restrictions limiting most social and commercial activities. As a result, commercial tenants throughout the country are going out of business, temporarily closing, curtailing operations, laying off employees and suffering sharply declining revenues.

Short-Term Leasing Workouts of Tenant Defaults

Thousands of tenants are partially operating or temporarily closed and lack sufficient cash flow or access to additional working capital to pay some or all of their rent. How should a landlord address a distressed tenant's default and request for rent relief, taking into account the landlord's own responsibilities to pay maintenance costs, real estate taxes and debt service on the property?

Reprinted courtesy of White and Williams attorneys Steven Ostrow, C. Jason Kim and Patrick Haggerty
Mr. Ostrow may be contacted at ostrows@whiteandwilliams.com
Mr. Kim may be contacted at kimcj@whiteandwilliams.com
Mr. Haggerty may be contacted at haggertyp@whiteandwilliams.com



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