How long until commercial property is hit? Sydney Industrial units.

Friday's father must have loved "Robinson Crusoe"
When he was young to name his son Friday.

 

I did manage a property where the tenant's middle name was Friday.

 

What's in the lease about these types of occurrences?

Are they walking away or just shutting until this blows over? What documentation can they provide to indicate that there's a directive that they must shut up shop?

 

Are you certain his middle name was not Wednesday and Friday was his end name

Was he confused when you said "see ya Friday " when you were not going to see Friday Friday

 

I am waiting on documents from my PM to see if this is official or what they have (apparently received a letter). It's a swim school with another 15 years on the lease.

The lease is clear that the tenant would be liable for any reason that they cannot meet their obligations (including permit issues which is what I am thinking that the government/council has forced upon them, I don't know how they are being enforced to stop work though).

One option is to simply defer the rent for a few months, another is for the tenant to break lease however if they are being forced to shut for months then I don't see what deferring the rent would do. Need to have a meeting and discuss this in length some more this week.

Either way, if they break lease it will be months of hassle and court ($$$) before any outcome will be met I am sure, and I highly doubt we will be able to get new tenants anytime soon.

 

Are commercial landlords able to access tenants security bond as a way to help each other through this difficult period? Cafes & restaurants biz are heavily depending on walk in
customers and are forced to shut down by government and therefore loss of income.

Given the context, failing to pay rents may not be breach of lease agreement, right?

 

Does your lease have a "no access " clause?

 

Not that I can see either in and of the scope of the retail lease, nor is it stipulated in the schedule
section of the lease.

Thanks,
FXD

 

Just had new offer. 12 month rent free.

 

Ouch .......do you negotiate half way or are they a primo tenancy in the long run?

I just had a new lease signed by a retail tenant of mine. Boutique wine store. Not a bar, but did wine tastings and small gatherings that would have ceased now but not a big dent to the biz. Customers though probably have other priorities in the short to medium term. Waiting for the email for some relaxation.

 

Sorry I’m the tenant here haha. Our lease expired and we are halfway through negotiation. We then said we’re leaving and they’re now offering 12 month rent free.

 

Are you paying all other outgoings as per lease?

 

Yes so we're going to reject the offer. I don't want to pay outgoings

 

Glad you're not my tenant lol.

 

What this pandemic has taught me is that the least stressful path to financial bliss is via public housing, the pension, Centrelink or a career in Healthcare. Everything else is fraught with unacceptable risk.

 

Well it's a huge decision after all.

Who knows where the economy will end up?

This country has not seen tough times since 1991, but my family's been through that and seen what can happen if you overcommit. Cash is king. If we do the business we may make a little bit more here and there, but if we get it wrong and get stuck on a lease we'll lose millions over a few years. If we were triple hit with other tenants squeezing us, banks doing annual reviews on non-residential properties, plus various redundancies etc we have to pay out (4 months' pay) when business has to wind up, that's how people go bust.

Can't go broke holding onto cash in this environment, so wouldn't do it unless it's a deal of a life time because I'm sure there's another deal of a lifetime around the corner in this market.

 

Ahh! Didn't read that way. More power to you. You're in the driver's seat in this market

 

really the “unacceptable risk” is high leverage without a contingency plan or a proportionally large, unecumbered asset base..

we are about to test the “low risk” nature of property.

Banks lend up to 90-95% for residential and up to 7-80% for generic commercial properties. For specialised commercial the max is usually 50%.

We are about to find out if this buffer is enough if an onslaught of sales begins.

 

Do lenders for limited/non recourse loans have, well, exception means of "recourse" to go back
after borrowers to share some of the liability or burden given the situation, or is it pretty clear cut
black and white?

I mean in scenarios where tenants go under, no rent payments etc.

 

Resi probably first to die from a underwater perspective. 90% lvr last 2 months prob under water already.