Our clients story about their Medical Space lease agreement
We just sold a practice in Washington, DC that ultimately worked out but it was “touch and go” until the end and I would like to recant the scenario for you. Our client had a lease with a little less than three years remaining. Our client did not have an option to renew the lease. The buyers bank, as is typical, required a minimum five year lease term to finance the sale of the business. Banks do not want the buyer to be without a location so typically look for at least five years between remaining term and option periods. Even a ten year term is better for the lenders.
LEASE EXTENSIONS AND TERMS
The buyer was hoping to do a two year extension on top of the 3 years left on the original term to satisfy their lender. Originally the landlord was fine with that scenario but changed their mind in the ninth inning of the game and many months of back and forth and big legal fees to both parties. The deal changed to a new eight year lease with a five year option. Terms were eventually agreed to but a lease needed to be generated and signed to “close” the deal. The landlord was a big institution with a long complicated lease agreement. Both parties were under severe deadlines and if the deal did not close it may not have because the lenders are now preoccupied with SBA and PPP loans making conventional loans a major hassle.
Frankly, without 25 years of real estate experience in the market the deal would not have happened. Most dental office sales have some real estate component but the business brokers do not have the experience or license to handle the real estate aspect of the transaction. When looking to sell or buy a practice get a consult on the overall real estate situation. A licensed, experienced broker will not charge for that assessment. Every deal has a practice broker, lender and lawyer, but a real estate broker HAS to be part of the equation. The deal has many parts and you want to make sure you have properly considered every part involved.
For a free consult please contact Charles Feitel at 301 365 6940 or email him at firstname.lastname@example.org.