It’s 3 A.M., and Sally is Face-Timing you. Fortunately, you were up slugging away at your coursework and tying up some loose ends for the project. After receiving the Marketing Study for the property in Boca Raton (PDF)
Download Marketing Study for the property in Boca Raton (PDF), Sally asked if you could review the market study immediately because it looks like a hot property and will probably not be on the market for long. She instantly jumps in, saying, “Look! I found a whole bunch of stuff that we need to review.
Sally specifies that she has read the material and has a better idea of analyzing the ROI. The luxury building is in a great location and has had an extensive renovation. The current restaurant tenant operates 24 hours a day, seven days a week. Sally points out that it’s a free-standing building with a total of 7,615 square feet and 6,000 square feet has air conditioning. Also, there is a 1,615 square foot outdoor covered patio and deck for outside dining. The property can seat 259 inside and outside, 93 parking spaces, and covered patio seating with a full bar and wine case setup.
There is even a dining room kitchen with a hood, a separate chef’s kitchen with a hood, and the mainline kitchen with an on-demand hood. The hood is critical because it contains fire suppressant equipment. Sally states that the three kitchen locations are an added benefit that will permit high-end customers special catering for her inner circle dining parties on the dining room floor. Having the hoods already installed saves a lot of money and may avoid major inspections by the city. If the fire hoods are not functioning correctly, the startup costs could skyrocket and delay the opening. Sally wants us to add that issue to the list to discuss with the owner. She also suggests we determine the effect of the current tenant deciding to hold over beyond the term. The broker was, after all, not too definite about the move-out date, and he only stated that the building was under lease by the restaurant tenant until July or August of this year.
She also points out that the market study specifies that the purchase price is $5,995,000. Sally states that there is also an option to lease the building under an NNN lease arrangement at $35,000 monthly rent plus $4,200 in property taxes monthly. Sally wonders out loud whether there was a potential for incurring other charges.
The broker provides you with three possible agreements: Contract for Sale of Commercial Property, Commercial Lease Agreement, and Triple Net (NNN) Lease Agreement. Analyze the terms and conditions of each agreement and their impact on your business plans. Redraft clauses based on changes you would like to make to your business plan’s long-term goals; fill in missing or blank sections and information; change any term or add clauses to match your goals. Make a list of the issues to discuss with the broker to negotiate favorable terms in the revisions you suggest. You will need this list and any changes for future assignments.
Review and complete the following agreements using all of the facts available and your understanding of the three transactions’ effect on your plans as presented in the case study. Complete all documents using the facts from the case study. Make all changes using a contrasting blue font.
- Contract of Sale of Commercial Property (DOCX)
- Commercial Lease Agreement (DOCX)
- Triple Net (NNN) Lease (DOCX)
Your research has produced the following information to analyze options in property transactions. Review the following for information and general references:
- Considerations for the Terms Needed in the Sale of a Commercial Property (Baker Donelson)
- The Purchase and Sale Agreement (Clark Wilson) links to an external site. – addresses various contract paragraphs and types of revisions available.
- Digital Commons Contract Tips (University of Tulsa)