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Real Estate Rental Strategies: Landlord vs. Tenant Perspectives

Explore common rent clauses like turnover rent and fixed rent, understanding advantages and challenges from both landlord and tenant viewpoints. Discover key negotiation points for mutually beneficial agreements in real estate transactions.

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Real Estate Rental Strategies: Landlord vs. Tenant Perspectives

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  1. Introduction • Stig German Mathiasen • Attorney-at-Law, Partner Rønne & Lundgren Law Firm 40+ lawyers • Real Estate team of 12 specialised experts within all aspects of real estate transactions, financing, structuring, tenancies, development and construction Præsentation

  2. What the landlordreallywants … • NO rent risk! • (and to get as much as possible in rent payments) Præsentation

  3. What the tenantreallywants … • NO propertyexpenserisk! • (and to pay as little as possible in rent) Præsentation

  4. Common types of rent clauses • Turnover rent • minimum rent (adjusted by index or by turnover in previous years) • possibility of adjustment of minimum rent to market rent • property expenses (all or some) paid on the side • Fixed rent • annually adjusted by index • possibility of market rent adjustment • property expenses (all or some) paid separately Præsentation

  5. Turnover rent from the landlord’sperspective • Disadvantages • Risk of rent payments below market rent in case of under-performance • Limited possibilities of reaction in case of underperforming tenants • Advantages • Possibility of upside • Appear more attractive for tenants with reduced property expenses in case of underperformance Some challenges: • Fixing of rent percentage - Internet sale – Monitoring of turnover – Adjustment to market rent – Application of minimum rent – Underperformance Præsentation

  6. Turnover rent from the tenant’sperspective • Disadvantages • Obligation to share upside with landlord • May undesirably influence price setting principles to keep up contribution margin • Advantages • Reduced property expenses in case of underperformance • Rent payments proportional to performance Some challenges: Fixing of rent percentage - Internet sale – Monitoring of turnover – Adjustment to market rent – Application of minimum rent - Underperformance Præsentation

  7. What the parties oftenshouldbediscussing … Præsentation

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