Posts Tagged 'Landlord'

Using Non-Disturbance Agreements to Protect Broker Commissions

Commercial Real Estate Professional Calls for Change to Industry Practices

Non-disturbance agreements have been around for a long time. They have become a crucial component in protecting corporate tenants from being removed from their space by lenders who may foreclose on the buildings occupied by those tenants.

Should commercial real estate brokers be entitled to the same protections…that, if a lender were to foreclose, the broker’s rights to receive future commissions would also carry forward and become the obligation of the lender?

Currently, in most states, broker commission agreements are personal service contracts between landlord and broker, and don’t run with the land. Basically, if a lender were to foreclose on a building where a broker placed a tenant, the broker would likely have no standing. If the commission agreement provided the broker with the opportunity to receive commission payments for future events, such as if the tenant were to expand, extend its lease, purchase the building, or otherwise, in most cases, the lender would have no obligation to honor the commission agreement. And, the broker would likely receive no compensation under the commission agreement.

Since commercial real estate brokers are often one of the primary reasons a tenant and a landlord are brought together, shouldn’t brokers be entitled to the same protections often afforded tenants?  Like the tenant not being removed in the case of lender foreclosure, and like other protections afforded landlords, shouldn’t the broker’s rights also not be removed?

This approach has been applied from time to time, but only in extreme instances, and with a lot of effort. An industry wide standardized “broker non-disturbance agreement” is an idea whose time has come, especially at a time when so many commercial landlords are losing their buildings and while others are simply not capable of paying their bills, including commissions.  Like a non-disturbance agreement between a tenant and lender, a broker non-disturbance agreement would be a separate document between broker and lender.  In a broker non-disturbance agreement, the lender would agree, in the event it foreclosed on the landlord, to take-on the responsibilities to which the landlord agreed in the commission agreement.  In this manner, the broker’s future interests would be protected through the agreement with the lender.

Some landlords may misunderstand the true positive value associated with offering broker non-disturbance agreements.  Consider the office building that is rumored to have financial challenges. Some brokers might be less eager to aggressively pursue transactions there for fear of not being paid. By offering a broker non-disturbance agreement, financially challenges landlords may be able to attract more brokers to their buildings, and ultimately, increase leasing activity and close more deals.

Of course, other opportunities exist to protect brokers, including the inclusion in the lease document the right by the tenant to pay the broker its compensation, while deducting that cost from its rental obligations

Either way, commercial real estate brokers certainly provide valuable services to tenants and landlords. And, with the extreme challenges and very real risks that exist in today’s business climate, like others, brokers are entitled to reasonable protections and the expectation that they will receive the compensation to which they are rightfully entitled, especially those to which others have contractually committed to pay.

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

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Commercial Real Estate Brokers: Shhh! Don’t Tell Your Tenants How Much Commission You’ll Make!

An Open Letter to Commercial Real Estate Brokers

Hey, commercial real estate brokers?  Keep your compensation a secret, even from your own clients. They don’t know how much you make, they’re too dumb to figure it out, and if you don’t bring it up they won’t think about it.  NOW, REALLY!

In most commercial real estate leasing transactions, commercial brokers representing tenants receive their compensation in the form of commissions paid by landlords.  Yep, that sure sounds like a conflict-of-interest to me!  But, unfortunately, that’s the way the industry works.

Guess what?

  • Your clients can figure out your compensation…and, they will!
  • Why withhold information from you own client?
  • When your role is to protect your client’s interests, withholding information that they can easily figure out on their own makes you look stupid and dishonest
  • Are you obligated to disclose your compensation to your clients? While you may not have any legal obligation to do so, from a moral and ethical perspective, I’m pretty sure the answer is “Yes!”

Whether or not you should disclose your compensation to your clients also begs other questions:

  • Why would you want to be transparent?
  • Are you concerned that someone might view your situation as your being over compensated somehow?
  • Did compensation discussions take place that may have negatively affected your client?
  • Is something negative going on?
  • Did you have to do any favors or compromise your position (or that of your client) to secure your compensation?
  • Were those favors at the expense of your client?  Did you disclose them to your client?
  • What might your client have lost in exchange for the compensation you secured?
  • Have you compromised your client in any way?
  • Do any conflicts-of-interest now exist or did they previously exist?

If all you’re doing is getting paid, fairly and adequately, why wouldn’t you disclose your compensation to your client…the one who is the very reason for which you’re able to generate compensation?

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com.   Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News

Biographies

Articles

Properties

What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Hire Us to Represent Your Property Because We Represent So Many Other Buildings!

“Hire us to represent your property, because we represent so many other buildings…and, we can tell about all of the leads at those buildings…to help you lease or sell your building quicker!”

In this day and age, when transparency and conflict avoidance are top of mind of almost every corporate executive, I am amazed that some commercial real estate brokers still use this tired and lame approach when soliciting property representation engagements.  What is truly amazing is, that given the above, some property owners still buy this line of trash!

Some brokers actually tell property owners that they should hire those brokers because the brokers represent a lot of other buildings and will share with them the leads that the receive on those other buildings.  That is a very common pitch!  Those brokers make claims like:

  • You’ll have our complete attention (How is that possible?)
  • Because we represent so many buildings in the local market, we see every tenant (Will you share my leads with other landlords?)
  • We’ll tell you everything that’s going on in the market (Will your other clients mind?)
  • Sign with us, and you’ll have a greater chance of making more deals (More or fewer deals?)

So, let me understand this:  Some property owners are actually comfortable not receiving true representation, the kind of aggressive and objective expertise designed to protect their interests, beat their competition, and help them succeed…the kind of service to which the broker representation agreements the sign actually entitle them?

Instead, they’re ok with their buildings being thrown into a large pool, so when a tenant jumps into that pool, if the property owners’ lucky number just happens to pop up, or if the broker overseeing that pool decides it’s that property owner’s turn, only then would they get a shot at that deal?  Is that really what they’re signing up for?

Do these property owners recognize that while they’re enjoying the supposed benefits of so many more leads that come from throwing their buildings into that very large pool, that some buildings or property owners will drown?  Do they think that brokers offering this service will favor them, and that all of the other property owners who were promised the same access to “all of the leads” won’t be clamoring for the same tenants?

Have these property owners considered that while they’re feeding on all of those supposed leads generated for them by all of those other buildings, that leads for tenants or buyers who may be sincerely interested in their buildings, will also be thrown into that pool, thereby possibly diminishing their likelihood of success?  Do they see that those tenants and buyers may be pulled from that pool and rescued by some other property owner at another building?

Is this true representation?  Isn’t this approach a blatant conflict of interest?  Do many property owners actually accept this approach?  Do the best brokers offer something better?

About Real Estate Strategies Corporation

Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com.

Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

For additional profiles, pictures, and more click here or go to http://realstratnews.wordpress.com/media-information/.

Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.

###

Exactly, How Transparent Are You?

As a commercial real estate broker, you probably consider yourself to be professional, fair, open, and honest.  Are you also transparent? Completely?  Follow these questions and comments and decide for yourself just how transparent you are and whether your clients view you the same way.

  • Can you describe the basic principles behind Sarbanes-Oxley?
  • Do you tell clients and prospects that you will be transparent in your dealings with them and on their behalf?
  • Are you really transparent in your dealings, or is that just marketing hype?
  • Do you keep your tenants and buyers informed about your dealings on their behalf and about the compensation to which you may be entitled when they complete their transaction?
  • Do you only mention compensation to your tenant clients when a landlord offers you a discount, an unacceptable rate, or payment schedule that takes too long or puts you at risk?
  • Do you also inform your clients when landlords offer you compensation bonuses or incentives?
  • Do you disclose relationships to your clients that THEY may see as being in conflict with your ability to properly serve their interests, even if you don’t see the same conflicts?
  • Are you really completely transparent?
  • Are your company’s relationships so vast and geographically dispersed that it is often difficult to understand the many possible conflicts-of-interest that may exist, let alone identify and report them to your clients?
  • Are you transparent with your transactional opponents and competitors?  Should you be?

Being transparent is not a buzz word, it’s an absolute, a must in business. You cannot be transparent on some issues, and not on others, and then claim to be transparent.  That’s being partially transparent, which means you’re not really transparent.  Either you’re transparent or you’re not!

Being transparent in your dealings is not that tough.  What are you afraid of?  Do you think your clients will figure out that maybe you’re not as good as you said you were?  Are you afraid that if you are transparent about your compensation that your clients may want some of it?  If you are truly concerned about this, then perhaps you should ask yourself if you really are worth what you expect to receive in compensation…if you deliver sufficient value to your clients, so that they will recognize your worth and entitlement to fair compensation.

Are you afraid to disclose that a landlord offered you a compensation bonus? Why? Do you deserve it?  Will accepting it have a negative impact on your client?  Would your client think so? Would your client be concerned that you didn’t disclose it?  If, for some silly reason, you chose not to disclose an offer of a bonus, what a tremendous opportunity you missed to build a stronger relationship with your client

If you don’t create a lot of value for your clients, if you’re merely an old-fashioned real estate space jockey, doing little more than driving your clients around the market, dropping them on a landlord’s doorstep and expecting to pick-up a check when the landlord completes your client’s deal, then you SHOULD be nervous!  While you’re still providing a service and are entitled to be paid, you’re probably not entitled to the same compensation as a true professional real estate broker or advisor who helps his/her clients plan and negotiate complex transactions and provides superior service to them.  Like in any other business, if you’re in it for a quick hit and provide minimal service and value, you should expect to be compensated in a similar fashion, and frankly, in a lesser amount than your competitors who really deliver!

Wouldn’t it be great if your clients backed you up when it came time for you to be paid?  Yours won’t?  Why not?  Could it be that you haven’t been transparent, that they don’t trust you or don’t believe that you are worth the amount of compensation you seek?  Your relationship with your clients, and how your compensation is treated, can’t be one way.  If you choose not to accept discounts, then don’t accept bonuses.  State your compensation requirements to your clients at the outset of your engagement. Inform them that you don’t accept bonuses, and neither will you accept discounts. When a landlord or seller offers you a bonus, tell them you must inform your client (that tells the opposition you can’t be bought), then tell your client!  $10 bucks says that, so long as you provide your clients with stellar service, every once in a while, your clients will let you keep those bonuses. If not, then by your transparent disclosure, it will be the best investment in your relationship with that client that you could ever make! You’ll also likely find that your clients will support you when a transactional opponent attempts to under-pay you or tries to put your compensation at an unfair risk.

If a rogue landlord attempts to force you to accept a compensation amount or structure that is less than you would ordinarily accept, advise the your client, and let the landlord know you intend to do jus that.. Many tenants won’t feel comfortable with a landlord who attempts to under-pay their real estate advisor, as they often see that as a sign that the landlord will be unfair to them, and will likely under-fund or under-deliver for them, too.  Ask your client to support your efforts to secure fair compensation.  If your client recognizes the value you’ve created for it, they’ll back you up almost every time!

Heck! Even if you don’t get to keep a landlord offered bonus, think of all the incredible goodwill you’ll create with your client, your ability to deflate the opposition’s intent on swaying your negotiating strength by “buying you off”, how much stronger you’ll be in negotiating on your client’s behalf, the additional concessions you’ll likely secure on your client’s behalf, the strengthening of your reputation, and the future credibility and additional business opportunities you’ll likely get from the client who knows he can trust you…even with cash!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com.   Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Welcome to the Men’s Room


Why commercial real estate brokers insist that tenants look at the office building men’s rooms when presenting space for relocation is a bit peculiar.

Don’t landlords know that people look at restrooms? As a result, don’t most landlords pay extra attention and keep them clean, even if they might not properly maintain other parts of their buildings?

I guess office building men’s rooms are like getting your signature notarized.  One only has a problem when you cannot get your signature notarized or when the men’s room is not clean and orderly.

Certainly, a clean men’s room should suggest the environment in which a company’s employees would work. However, is it really a true indicator of the quality of a building and how well it is maintained and managed?  What about the building’s financial circumstance and that of its landlord?

In challenging economic times where good companies work diligently to avoid financial collapse and good landlords find it difficult to attract new tenants and retain existing ones, a well-maintained building suggests that the landlord may, in fact, be focused on more than just protecting its investment. However, essential to determining the long-term viability of any potential real estate transaction is a thorough investigation of the physical condition of any property under consideration, as well as, a detailed review of the landlord’s ability to perform, not only operationally, but financially in accordance with the intended terms of a lease.


About Real Estate Strategies Corporation

Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Always Cut Your Commission!

Yeah, that’s right!   “Always Cut Your Commission!”  And, why not?  If the only value you can offer your clients is your price, then you probably will have to cut your commissions to stay in business!

Actually, let’s clarify what is often referred to as “Commission Cutting.”  It simply means that one broker is willing to sell his or her services at a lower rate than he or she would for other projects, or perhaps in comparison to his or her competitors.  So what?  Does that mean every one in the local market must sell their services at the same price?  If you buy shoes from one store at a low price, does that mean that all of the other shoe stores will lose all of their customers and go out of business, just because you got a good deal?

Just like in other industries, there exist many common practices in commercial real estate, including those surrounding broker compensation.  But, no “standard” compensation or commission structure exists.  In fact, in most states, setting commission standards is considered price-fixing, and is illegal!

So, what’s all this noise about brokers who cut their commissions and how that supposedly affects the compensation of other brokers?  The response I often hear is that if one broker offers low-priced services then every landlord, tenant, buyer, and seller in that market will make the same demands.  Really?  Well, guess what?  They already want your services at the lowest possible price.  Shouldn’t they?  Don’t you want to buy those shoes as inexpensively as possible?  Don’t you negotiate for a lower price when you buy or lease a car?  Didn’t you negotiate when you bought your home?  Did everyone else get their home for the same price you did?  Of course not!  Seeking a lower price is the American way, and there isn’t a darned thing wrong with it.

Ask yourself these questions:

  • Are you a low-cost service provider?
  • Is low-cost always the winner?

NO!  If that were true, there would not exist high-priced hotels, restaurants, resorts, clothes, homes, cars, etc., etc., etc., or anything of better quality.  If low price always won, consumers and businesses would never buy the best quality or engage the best of any service provider.  Instead, they would only hire the cheapest.  And, in those instances, they’d get what they paid for.

Forget what other brokers do.  There is plenty of room in every industry for low-cost service providers, because some clients do make purchasing and hiring decisions purely on cost.  Low cost, almost always means low quality, and those who hire only on a low-cost basis typically receive services commensurate with what they pay.  And, if that’s their preference, so be it!

The answer here is very simple:  If you are a low-cost service provider, be the best one in your market.  If, on the other hand, you wish to be something other than low-cost, make sure that like Mercedes, BMW, Nobu, Gucci, and other fine products and service providers, you provide your clients with such incredibly valuable services, experiences, and outcomes, that your other-than-low-price will be warranted and you will be in demand!

About Real Estate Strategies Corporation

Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com.

Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

For additional profiles, pictures, and more click here or go to http://realstratnews.wordpress.com/media-information/.

Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.

###

Do Corporate Tenant Real Estate Advisors Go Too Far?

Do corporate tenant real estate advisors go too far?  Some landlords think that those real estate professionals who advise corporate tenants, often over-negotiate lease transactions on behalf of their tenants.

Is this just sour grapes? Is it  because landlords don’t like negotiating with tenant advisors who understand the commercial real estate game and put money back into the pockets of their corporate tenant clients?  Is this because landlords don’t like the idea of paying commissions to tenant advisors who negotiate against them? Or, is there truth to this…that corporate tenant real estate advisors really do go too far when negotiating leases for their clients?

What is going too far, really?  Is it too far when a tenant seeks more than a landlord would prefer to give…more free rent, rent discounts, construction allowances, flexibility, options and rights, favorable terms, or otherwise?  Is it too far when a tenant directs its advisor to negotiate certain terms the landlord may not like?  Is it too far when a tenant advisor does all he / she can to achieve the best terms for his / her client?

When landlords feel that tenant advisors go too far, could this really be more a matter of market conditions?  If a landlord’s competitors will not support the terms a tenant seeks, can that tenant realistically expect to achieve such goals? Not likely.

I’ve heard some landlords complain that tenant advisors unfairly fill the heads of executives with the idea that corporate tenants are entitled to all kinds of goodies when negotiating leases.  They often say that this practice is unreasonable, as it makes negotiations difficult for landlords.

Note to commercial landlords: The role of tenant advisors is not to make transactions easy for landlords…nor, is it to make transactions difficult for landlords.  In fact, the tenant advisor’s role is to enhance and protect the interests of its corporate tenant clients by understanding their business objectives and to recommend transaction strategies and structures that would support them.  The tenant advisor’s role is also to negotiate aggressively to secure as much for the tenant as possible.  Seasoned tenant advisors understand the limits after which they might put their transactional opponent landlords in danger or even jeopardize a transaction.

Just like how the role of landlord advisors is to work to benefit landlords, the job of the tenant advisor is clearly defined.  When a tenant advisor makes demands that a landlord finds too great, perhaps it simply means that the particular transaction just isn’t right for that landlord.

At times when supply is low and demand is high…in markets that are favorable to landlords, do tenant advisors still go too far?  In those markets, I rarely hear such complaints.  When the odds are stacked in favor of landlords, how far would be too far for “landlord” brokers to go?

Do some corporate tenant advisors go too far? I’ll answer that question this way:  Is this really an indictment of all tenant advisors?  Do some landlords and landlord brokers go too far?

About Real Estate Strategies Corporation

Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to financial and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com.

Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

For additional profiles, pictures, and more click here or go to http://realstratnews.wordpress.com/media-information/.

Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.

###

Sleeping with the Enemy Broker

For those companies who prefer not to formally engage real estate service providers because they choose not to sign representation agreements, answer me this:

“Do you enjoy sleeping with the enemy?”

That’s right! The commercial real estate broker with whom you are working, the one who presents properties to you, the one to whom you have disclosed important information about your company, the one who says he’ll keep your information confidential, the guy who said he’d get you the best deal…is the enemy!  He has a legal, binding, fiduciary obligation to disclose everything about you, your company, and its real estate needs to property owners, including your confidential information. He is compelled to negotiate against you on behalf of property owners, to get you to pay as high a price as possible, and to get you to agree to terms that would be more favorable to property owners.

That’s right! The law of agency requires that, absent a written agreement to the contrary, a real estate broker is the agent of, and must protect the interests of, the entity from whom he or she receives compensation. Since, in most commercial real estate transactions, broker commissions are paid by landlords, without a written agreement between you and the broker stating that the broker represents you even though he’ll be paid by the landlord, you’re out of luck!

Surprised? You shouldn’t be.  Don’t take my word for this.  Ask any attorney how this really works.

But, deals are done this way all the time….right? So, why change things now?  Formally engaging a real estate professional to represent a company in acquiring real estate is not a new concept.  In fact, most commercial real estate transactions nowadays include both a landlord representative and a separate tenant representative, where the tenant representative has been formally engaged by the tenant through a written agreement.

Don’t landlords sign representation agreements with real estate brokers?  Doesn’t your company sign other agreements and contracts, such as leases, purchase agreements, service plans, employment agreements, vendor contracts, and others?

So, why not hire a real professional and protect your company’s interests?  Perhaps you don’t trust your broker or would not want to be bound to him.  That’s an easy one!  Find the right broker…and, hire him by a written agreement that protects your company’s interests.

Then, you and your company will be protected, and you will be assured that you won’t be sleeping with the enemy!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

broker, commercial real estate broker, landlord, commercial real estate, office space, industrial, warehouse, distribution, commission, representation, New Jersey, RealStrat, zezas, Real Estate Strategies Corporation

Mr. Landlord: When You Convince All of Your Other Service Providers to Reimburse You…Call Me!

If you’ve read any of my writings over the last few years, my positions are clear about the silliness that some die-hard commercial landlords still play when it comes to paying commissions that are due real estate brokers. Most landlords are very professional, appreciate the efforts put forth by commercial real estate brokers, and gratefully pay their compensation in-full and on time.  But, there still exists this small, decreasing group of curmudgeon-like landlords, who think it is their right to treat brokers unreasonably and unfairly. Their days, like their ability to realize great success, are numbered.

One of my all-time favorites is how many in this dying little group of commercial landlords think that real estate brokers are the guarantors of tenant creditworthiness, and that commissions paid to brokers should be conditioned and contingent on tenants performing their lease obligations. Some of these knuckleheads even think brokers should reimburse landlords when tenants default. The answer to this is really simple.  Commercial brokers:

* Are not credit analysts, and cannot provide you with any more details than you can obtain on your own

* Cannot guarantee tenant performance any more than they can guarantee landlord performance

* Deliver tenants to landlords, landlords to tenants, and negotiate transactions

* Have completed their job when the lease is executed

* Are protected by the laws of most states, which say that commissions on lease transactions are earned when the documents are executed, not over time or based on anyone’s performance

Despite the above facts, some landlords unfairly seek to shift their business risk to commercial real estate brokers, by claiming that the commissions due those brokers should either not be paid or reimbursed to the landlord, if a tenant defaults in the performance of its lease obligations.

To those landlords, I offer a simple response:

When you stop payments to, and / or receive reimbursements from ALL of your accountants, advisors, architects, attorneys, builders, cleaning companies, consultants, contractors, cost estimators, expeditors, delivery companies, drywall installers, electricians, elevator companies, engineers, environmental service providers, financial advisors, fire safety technicians, HVAC installers, insurance brokers, landscapers, lenders, masonry contractors, maintenance companies, management company, mortgage brokers, paving contractors, plumbers, roofers, security contractors, steel erectors, subcontractors, suppliers, tax advisors, trash haulers, truck drivers, utility companies, vendors, window suppliers, YOURSELF, and everyone else involved in your transactions in any way…AND, you advise me BEFORE we engage in any discussions that you will unfairly attempt to shift your business risk to me and to everyone else…only then, would I possibly consider doing business with you!

And, after you inform all of the above about your new payment policies, let me know how much longer you actually expect to be in business.  Frankly, when I explain your approach to my client…the tenant…there’s a very good chance they won’t want to do business with you, either!

So, let’s avoid this ridiculous conversation.  You bear what is rightfully your risk, the tenant will bear its risk, and we’ll bear ours, so we can all focus our energies on the real reason we’re engaged in a dialogue…creating a transaction between you and our tenant!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

9 Defensive Strategies When Your Building is in Serious Financial Trouble

So, what happens if you uncover bad news and find out that your company’s landlord isn’t just managing cash flow but, may truly be in danger of losing its building…..the building YOUR COMPANY OCCUPIES?!

Here are 9 Defensive Strategies When Your Landlord May Lose The Building Your Company Leases, that might stave off catastrophe:

1. Buy the building from the landlord (This one may be challenging if your company is a small tenant in a large building)

2. Buy the building’s mortgage from the lender

3. Sublease your space (This strategy may be least effective if the building is experiencing financial hardship, especially in markets with little demand for space)

4. Restructure your lease (Can your company create enough of a financial benefit for itself and its landlord to save the building? What would be the quid pro quo?)

5. Seek self-help (Which services, on which the landlord may default, can your company perform or have performed by other service providers, without placing itself into default of its lease?)

6. Check with your real estate professional (What’s the word on the street?)

7. Check with your attorney (What legal remedies might be available to your company?)

8. If your lease is scheduled to expire, move now….move early (The double rent that your company might pay for a short time period, if it moves to other quarters before its lease expires, may be cheap in comparison to the expenses, lost productivity, and other challenges it might experience if the landlord loses its building)

9. Have a conversation with your landlord to determine what you might work out together
In tumultuous economic times such as these, prudence demands that executives be proactive in understanding the stability and risk associated with the real estate their companies occupy.  Advanced planning and a little investigative work, coupled with creative solutions can go a long way to protecting your company’s flank.

 

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###


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THIS WORK IS DESIGNED TO PROVIDE PRACTICAL AND USEFUL INFORMATION ON THE SUBJECT MATTER COVERED AND REPRESENTS THE OPINION OF THE AUTHOR. HOWEVER, IT IS PROVIDED WITH THE UNDERSTANDING THAT THE AUTHOR IS NOT ENGAGED IN RENDERING LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE TO THE READER. IF LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. THE AUTHOR SPECIFICALLY AND EXPRESSLY DISCLAIMS ANY LIABILITY THAT MAY BE INCURRED AS A RESULT OF THE USE OR APPLICATION OF THE INFORMATION THAT IS CONTAINED IN THIS WORK.