The Ins and Outs of Lease Workouts

Dana Schiffman

SAN DIEGO—The stakes in a lease-workout transaction can be high for all parties involved; creativity, knowledge and know-how are key ingredients to obtaining a successful outcome, Crosbie Gliner Schiffman Southard & Swanson LLP partners Dana Schiffman and Sean Southard tell GlobeSt.com. As the woes of brick-and-mortar retailers continue to mount and some speculate about the end of the current positive trends in the commercial real estate cycle, now is a good time for commercial real estate professionals to re-familiarize themselves with the ins and outs of lease workouts, the two say.

We spoke exclusively with Schiffman and Southard on this topic. While the discussion is with retail tenants in mind, they say the tips apply regardless of the asset class. For both the landlord and tenant, the relief that is ultimately given must be sufficient to help the tenant avoid a future default or bankruptcy in the short term. Ultimately, both parties need to get the terms and conditions of a lease workout “right” to avoid a failed outcome for both.