The Owners position: What do they want? Why?
The Seller would like to capitalize on his most profitable real estate holdings. Selling the
property at maximum return is the Owner’s ultimate goal, and she realizes that the age
of the building is eventually going to present problems in any future sale, even though
the building was recently completely renovated. The building owners’ interest is to sell,
preferably within the next two months, before or on the date of the current lease
terminates. If not, the Owner’s carrying cost increases since the building may go vacant
until she identifies a new leaseholder. A sale solves all of the Owner’s issues because
the price includes the Amortization of the building renovation costs in the asking price,
including a six-month lease recovery premium in the event the building was to remain
vacant until a sale. The Broker has stated that that the Owner would consider a lease
arrangement either a straight term or a Triple Net lease. There is also the option for any
variation such as a Net or Net-Net Lease with terms such as taxes, utilities,
Amortization of the renovation costs, and rent-plus percentage based on Gross income
from the Restaurant.
The property owner believes that the property fits well within Sally’s plan to establish a
new Restaurant. Great location, floor setup, lots of parking. The current tenant has had
an exceptional long-term reputation in the area, and the customer base should help
establish and carry over to the new Restaurant.
The though is that If the purchase price is too top-heavy, maybe they will consider the
NNN Lease options. There may be some room for negotiation on the purchase price,
but that depends on Sally’s costs model. There may be a slight margin based on the
carryover of the tenant or discounting the lease price if Sally assumes the final lease
period any holdover pass the lease period. Also, the cleanout costs are high, and
maybe if there was an assumption of that responsibility, there could be adjustments
made.
An assumption probably would make sense if Sally wants to get in early to renovate to
the floor plan and set up the kitchen and dining floor and start ordering and stocking
foodstuff.
The Owner believes that his walk-away alternative is that he will not go over a 20%
discount on all pricing terms. He is willing to carry the property until a buyer comes
along within, at least the end of the current tenant lease expires.
The Owner will discount the price of the sale by as much 30% net thirty-days if offered a
cash buyout and not have to wait for financing to take place.
The Owner realizes that the best solutions for both parties would be to reach a
reasonable price reduction with incentives to close early and turn lease period revenue
over to the buyer.