COVID-19 and My Healthcare Real Estate Lease

A doctor’s lease is typically the 2nd highest expense in any practice, but fortunately it’s highly negotiable. COVID-19 is providing for much uneasiness in the market, and it’s crucial for doctors to seek guidance from experts who have a fiduciary responsibility to protect their interests.

We have the privilege of representing thousands of healthcare providers each year with their commercial real estate decisions. One of the ways we are currently helping the healthcare community is by answering questions about what healthcare providers can currently do to get beyond this difficult time in regards to their lease.

We are also providing FREE EVALUATIONS so that healthcare providers can get accurate answers to the following questions:

  • How do my lease terms compare to the
    current market?
  • When is the ideal time to start my next transaction?
  • How will COVID-19 affect the commercial real
    estate market?
  • Is now the best time to renegotiate my lease?
  • How can I capitalize on my next transaction?
    • Startup
    • Relocation or Additional Location
    • Building purchase
    • Practice acquisition

The uncertainty in the market might provide some much-needed leverage in your impending lease renewal or next transaction. Conversely, a misstep could have unforeseen consequences now and in the future. It’s imperative that you seek expert advice before contacting your landlord.

Reasons To Review Your Lease

My lease expires in the next 18 months. Your expiring lease offers an opportunity to potentially renegotiate significantly more favorable terms that provide immediate relief now and in the future. What you do today will greatly affect your ability to negotiate future terms. Do not make the mistake of giving away your leverage by asking your landlord for rent relief. A specific posture must be used in order to achieve optimal results.

I have more than 18 months on my lease and cannot pay my current rent. Not paying your rent may trigger negative clauses in your lease that can be a burden in the future. It’s important to document any rent relief agreements with clear acknowledgment of the terms. Your financial advisor might recommend a refinance of current debt or relief utilizing available programs.

Why is my landlord asking for my updated financials? There are several reasons your landlord might be asking for financials and it’s important to understand why. For example, a tenant’s financials are sometimes required for the landlord’s bank loans. The financial strength of the tenant could sway underwriting and we can use this in your favor. On the other hand, landlords are trying to maximize their return on investement and could be trying to increase your rent.

My landlord wants to change the terms of my lease. Be careful that you do not give up the negotiated terms of your lease. This might greatly affect your ability to maintain your space or sell your practice in the future.

Should I Pay Someone To Negotiate My Lease?

Tenants should always be afforded representation and should never pay a so-called ‘negotiator’ to do what an expert, local real estate specialist will do for you. Additionally, any party representing you in a transaction should be able to clearly define how they can use posture or leverage to positively effect change. Simply asking the landlord for better terms is not a negotiation strategy that produces results at the highest level. Posture and leverage are key. It’s advisable to always seek legal advice from an attorney but be cautious of anyone charging a fee up front to make changes to a lease, or when an attorney tries to act as a real estate agent without the needed local market experience.

Right now, every state and every market is being affected differently by the situation and each healthcare provider’s specific lease impacts the answers to these questions.

CARR only represents healthcare tenants and buyers. We would be honored to speak with you and answer any questions you may have and offer our insight into how you can best position your practice to get through this situation, as well as prepare to thrive once we get past this.