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Sep 6, 2020

Commercial Rent Relief From The Novel Coronavirus (COVID-19)

Many clients have contacted us for assistance and recommendations in dealing with the impact on their business from Novel Coronavirus (COVID-19). Specifically relating to rent relief strategies.

While the government is offering some relief programs, businesses still need to evaluate all of their options in dealing with the harsh financial blow of the government’s closing of non-essential businesses.

Although landlords are also affected by the pandemic, landlords have an obvious mutual interest in the fiscal health of their tenants. 

There are three general rent relief options that could be considered:

1. Compassion Reduction

Compassion Reduction is where the relationship of the tenant is so valued, the landlord is willing to offer rent abatement or short term lowered rent as a good will gesture and appreciation of the business relationship with the tenant.

2. Deferred Rent

The Deferred Rent option is a restructure of the rent schedule for the remaining portion of the active lease term. This could include some immediate rent abatement or rent reduction for the immediate future with a ramp up or future balloon payment at the end of the lease. This is a good option as the landlord is still collecting all the rent but deferring some rent dollars and allowing the tenant some recovery time. 

3. Blend and Extend

The Blend and Extend strategy allows rent abatement and lower rent schedules in exchange for an extension of the lease term. This may be the option that could offer the most in abatement and rent reduction as this scenario includes the landlord actually getting something in return. Tenants must be cautious with this option and be sure they are aware of the current rental market and critical strategies as with all lease renewals and extensions.

One strategy “does not fit all” and each business has unique objectives, scenarios, and requirements which should be assessed and customized individually.

Call Carrow Real Estate Services today for a free, no-obligation consultation to help find the right strategy for your business. May all your family, friends, and associates be safe and healthy through these unprecedented times.