NEWMARK KNIGHT FRANK

LEASE RENEWAL: OWNER’S DEBT IS A KEY FACTOR

It’s vital that tenants understand their landlord’s motivators, and one of the most important motivators goes far deeper than simply maximizing profit. Understanding and leveraging an owner’s debt timing can lead to significant cost reductions for tenants.

Building owners, particularly those who own large buildings, leverage debt. In the vast majority of cases, that debt’s interest rate is the single-most important determinant of profitability. If the rate goes up at loan renewal, costs increase and margins across all tenants are reduced. Conversely, a building filled with reliable tenants under long-term commitments can look forward to favorable rates at loan renewal and, thus, better profit margins. The reason for the rate differences is obvious – a building’s risk to the lender is reduced, leading to better credit terms…

Read full article here.

Written by GHS member John Cobb. John specializes in healthcare and technology tenant/buyer and seller representation. His personal blog is www.healthtechre.com.

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2017 Healthcare Real Estate Outlook