Age Advertising’s Andy Goodman writes for Billboard Insider on out of home leasing and development. Andy’s last column was on lease terminations and keeping your options open. Today Andy reviews three lease negotiations.
Last week I worked on three separate property owner negotiations with their Lessee, the billboard company. I represented the Lessor and had three very distinct outcomes, one in favor of the property owner, one in favor of the Lessee and other just very surprising.
The one in favor of the Lessor took about five months to negotiate. This prime location, double face bulletin, was expiring this year. The property owner had not received market value for a long time and the annual rent was well below the average. In the end we negotiated a large increase in rent, a substantial revenue share and good language, such as
- 6 month prior notice to cancel lease
- 10% increase every five years
- Renegotiate deal if billboard is to be upgraded to digital
- Lessor’s billboard cannot be used as takedown trade for digital on another property
- Any reduction had to be agreed to by both parties
- Any reduction lower than 25% triggers the Lease to month to month
- 6 month notice prior to reduction
The second negotiations was out of my local market. The property owner had sought me out because they felt bullied by the Lessee. The Lessee was interested in upgrading a single faced bulletin into a potential double faced digital. The Lessee stated, “they wouldn’t give the Lessor any details about the upgrade or a timeline until they had a new Lease in place.” I say, “what a fiasco and not a very professional way to work with your Lessor.” The Lessor also stated that the Lessee had other alternative locations and if the Lessor didn’t sign the Lease immediately they would go to another location. These are all tactics used by the Lessee to get the best deal possible and I have talked about this in previous articles. I was surprised by some other misinformation that the Lessee had given the property owner and felt we could negotiate a better deal for the property owner. After following up with the real estate rep for three weeks, I was finally told they would not negotiate because they had found an alternative location. This is always a possible outcome when the Lessee has options. If the Lessee doesn’t sign with another Lessor I look forward to talking with them again.
Lastly, I worked on an in-market project that was not unique. The Lessor had forgotten about the Lease and it rolled over into a new Lease for another ten years. I explained to the Lessor that this was usual and I would do my best to convince the Lessee to work with the deal, the Lessor agreed. I talked with the Lessee and made an offer. I will get the Lessee a twenty year deal and asked them to get me a financial offer. Over the phone on one call I was able to get an increase to the annual rent and then 10% increases every five years. “This was great, the Lessee didn’t have to do this but they were interested in being a good Tenant.” I took the deal back to the Lessor and their response was not what I expected, “they were disappointed and told me they would have to think about it.” My advise to the Lessor, “don’t look a gift horse in the mouth.” Take the deal and be happy that you’re not stuck with the rollover.
What a great week in negotiating new deals.
You can reach Andy at andygoodman.age@gmail.com or 310-721-8422.
[wpforms id=”9787″]
Paid Advertisement
