Common Areas of Real Estate Risk and Solutions

Acquisition of Targets and Add-Ons (Pre -Closing)

  • Related - Party Leases

    • These leases are largely over - market in terms of rent and terms.​

    • PPA Mitigates this risk by conducting, FMR analysis (supported by comparable data points) for each related party lease property.

  • Change - in - Control

    • Common Lease Provisions

      • Prohibition of Assignment​

      • Assignment with Lessor's Consent (reasonable or otherwise)

      • Assignment permitted, however original Lessee remains liable

      • Recapture

    • Common Traps

      • Increased Security Provisions ​

      • Rent Renegotiation 

      • Other Lease Term Renegotiation

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Deferred Maintenance ​

 

Even in Medical Office Buildings Deferred Maintenance​ is the norm not the exception. If the Lease is a triple net, the Tenant has all the benefits of ownership (maintenance, repairs and replacements) without holding title.

Areas of risk include maintenance, repairs and replacement of the following.

  • Roof structure

  • Mechanical, electrical,. plumbing systems (MEP)

  • Parking lot and drives

  • Drainage, water migration​​​​

Real Estate for Portfolio Companies (Post-Closing)

  • Troubleshooting

    • Identifying and solving problems (please see sticky situations).

  • Portfolio Lease Management - Beyond Accounting

    • Smooth operation

    • (Organization of Exit)

  • PPA MOB Fund I 

    • A medical office building investment fund created to serve doctor/landlords who have sold their practices ​to a PE client of ours. 

Plaza Property Advisors

312-670-1500

200 East Walton Place Chicago, IL 60611

©2019 by Plaza Property Advisors.