Landlords will forever insist on seeing financial statements before finalizing a lease deal with a tenant, whether they are a small business or a publicly traded company. And they should. But what does a tenant do if their ship has been tossed – and perhaps badly damaged – in the hurricane of the recent, extended recession? And, I mean, who amongst us didn’t suffer?
I have represented tenants who, in some instances were looking to downsize for the sake of their very survival. It was unlikely their financial statements were going to inspire many landlords to spontaneously break into song. So, did this tenant need to resign themselves to rejection? Absolutely not.
Landlords suffer a parallel fate as their struggling tenants. They naturally prefer tenants that have capital reserves that will better insure that their rent will arrive in the mail every month. But in challenging economic times they are forced to look beyond the numbers, and good brokers can coach their tenant clients how to tell their story in a persuasive way. It requires taking the time to learn about the tenant’s business and ask some difficult questions to get to the truth.
I recently negotiated a lease for a client – we’ll call him Stuart – who is a prominent, established interior designer for large homes and hotels. His industry was decimated by the recession and the very fact that he survived at all was a testimonial to his reputation and perseverance. We presented the landlord with a couple of years of personal tax returns. This gave the landlord the facts. They are what they are. Starting off with honesty is always the best policy. But what we submitted with the numbers was Stuart’s story: his 30 year history in the business, his impressive resume of clients worldwide, and his nimble resizing of the company to insure its continued viability. We worked together on the story so it hit what I knew from experience would be a landlord’s hot buttons . We proceeded to final lease documents without a single question from the landlord.
The facts + a success story that harkens back to better times = the new creditworthiness.