MIXED USED RETAIL SPACE

A RECOVERY OVER $300,000

A retail tenant entered into a base year type lease agreement for mixed use retail space.  As part of the landlord’s inducement for the tenant to enter into the lease agreement, the tenant obtained one year of free base and additional rent.  Beginning with the second year of the lease term, the tenant was obligated to begin paying base rent and its prorata share of expenses in excess of the base year.

After a thorough review of the lease agreement and landlord billings, The Symphony Group identified discrepancies between the detail amounts that comprised the base year and the expenses that were subsequently being charged to the tenant.  The major issue identified was the absence of any management fee in the base year. Beginning with the second year of the lease term, the landlord began charging the tenant a management fee in excess of $35,000 per year. Since the base year amount calculated by the landlord did not include any amounts for management fees, the tenant was in fact paying 100% of the management fee instead of any amounts in excess of the base year.

The landlord took the position because there was no rent payable during the initial year of the lease term, the exclusion of a management fee in the base year was proper.  The Symphony Group took the position that the tenant was obligated to pay only its prorata share of any increase in management fees but not the entire management fee.

The Symphony Group was able to facilitate a recovery in excess of $300,000.

© 2016 by The Symphony Group