Goodyear Asking for 3 months Rent Abatement Immediately on Tire Shop
I just received a letter from CBRE who represents Goodyear Tire "we are seeking an immediate three month rent abatement."

We are a small family sharing ownership of this one commercial property which we own outright and we do not own any other rental properties.  We are all struggling during this time and have our own bills and mortgages.  We would be willing to talk to CBRE about options, but if anyone knows the law I would appreciate some information on what our rights as landlords are.
[{"id": "fmcl1xz", "text": "Do you own it outright or do you have a lender?", "replies": [{"id": "fmcmirn", "text": "Owned outright.", "replies": [{"id": "fmcs647", "text": "Send them a ceritifed letter that says no.  They are asking to force you to find programs that can help you help them.  You own it outright.  They pay or else.", "replies": [{"id": "fmcu040", "text": "I disagree here, OP. If it\u2019s a business that you think will bounce back when this crisis is over, it would be worth working out a payment plan with them.", "replies": [{"id": "fmcu7ea", "text": "Just because you say no doesn't mean no, it means 'no i will not give you a break, for now, and i retain all my rights.\".", "replies": [{"id": "fmcufb7", "text": "I don\u2019t see why OP wouldn\u2019t be proactive in working something out.", "replies": [{"id": "fmcv17s", "text": "A lease is a lease.", "replies": [{"id": "fmcwkok", "text": "And a force majeure clause is a force majeure clause. The world isn\u2019t always black and white, it\u2019s better for both parties to figure something out.", "replies": [{"id": "fmd22ti", "text": "Landlords should not be persuaded by a tenants immediate claim that force majeure, whether or not covered in a lease clause, allows a tenant to forego its obligation to pay rent since almost all leases do not provide, directly or indirectly, for tenants rent payments to be excused by force majeure. \n\nActs of god require damage, so unless the building was physically destroyed in a riot, it would most likely not apply. \n\nBeing under-capitalized in an economic downturn is not an act of god.", "replies": [{"id": "fmddm1z", "text": "Force majeure can - and many times - cover business operations that are deemed illegal subsequent to lease execution. Depending on OPs state, it\u2019s likely the auto shop was mandated to shut down, making operations illegal.", "replies": [{"id": "fmde7mn", "text": "Auto repair has generally been deemed essential in most Canadian provinces... not sure what the case is in the USA.", "replies": [], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "fmd03o2", "text": "&gt; They pay or else\n\nThe problem really is the \"or else\". What is the real alternative here? \n\nReplacing them with another tenant in a market that is going to be very difficult to get someone to sign a new retail lease?\n\nSuing them for defaulting on their lease obligations when the courts are going to be absolutely buried in similar claims for years?\n\nNeither of these are viable options. You should give them the rental abatement, but recover that rent later in the lease term, perhaps starting Jan 1.", "replies": [{"id": "fmd0o1a", "text": "Andyone can pay whatever they want. They still owe the money.", "replies": [{"id": "fmd1f4y", "text": "Owing the money is one thing and collecting it is another. For a small owner, it's probably better to agree to a modified lease and keep them as a tenant, than in the hop of enforcing their existing lease as written and spending possibly years in litigation about it. It's about choosing the lesser of two evils.", "replies": [{"id": "fmd1otl", "text": "I don't feel to bad for Goodyear.  They owe the money, they can pay it. You don't have to go enforcing anything.  But don't go giving discounts either. I 100% guaranteet that their attonreys told them to send that out, in addition to getting whatever backyard deal they have with the bailouts.", "replies": [{"id": "fmd1xuk", "text": "If they just straight up say \"we aren't paying\" then yes, you would have to go enforcing it if you refuse to negotiate with them.", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmcmf0b", "text": "You should 100% consult a real estate attorney. That being said, this is probably a negotiating tactic. You should have a corporate guarantee in your lease structure. Maybe counter with a rent discount for 2-3 months then make it up once they restart operations", "replies": [{"id": "fmdbjj7", "text": "Agree with the attorney, because your tenant definitely has one.   That leads to the question, who is the tenant on the lease?  Is it the parent company, and SPE operating as Goodyear, or something in between.   If it\u2019s the parent ask yourself, is three months rent on your space going to bankruptcy Goodyear?    Of course not.   They are just bullying you.  If it\u2019s an SPE, then you have a legit concern.   Regardless if the lease has any teeth they are on the hook and at best I would offer to defer only as much rent as you can afford to not collect today, but make them repay the deferred rent in a reasonable timeline (start at YE 2020).    Don\u2019t trade term now for additional term at the end of the lease unless there is little term (in which case you should use the short term assistance to negotiate a longer renewal), or you have a significant rent bump before the end of the term.  Otherwise the time value of the rent will eat away at your income.    Typically force majeure will allow a tenant to forgo the actions the event is preventing them from doing (in this case operating), but nothing is stopping them from writing checks in this environment .  Chances are you hold the cards but a good attorney can confirm.", "replies": [], "depth": 2}, {"id": "fmdljhj", "text": "Don\u2019t take a discount at all. Say you will move the three months rent and add it to the end of their lease.\n\nIf need the money now, work out a 50% payment for the months when they are not operational.", "replies": [{"id": "fmfbl69", "text": "Differing the lease is the best thing to do. I\u2019m doing it myself w my tenants.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmcmget", "text": "Talk to your bank ASAP, explain what\u2019s going on. The Fed is allowing banks to restructure without penalty/classification of distress.", "replies": [{"id": "fmcsl4h", "text": "OP owns it outright.  Don't do shit.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fmcmk2r", "text": "1. Need to know if this is financed and if so, by who (if it\u2019s agency financing, you have some options under the CARES Act) - loan agreements will often contain restrictions on your ability to provide abatements. \n\n2. What does your lease say? For example, does tenant get a cure period for failure to pay rent / what are your remedies if you call a default.", "replies": [], "depth": 1}, {"id": "fmcn4ks", "text": "Give three months deferral that will be added onto the end of their term.  Also have them pay the nets of the property, they are a large enough company that they should be able to support that.\n\nIf their term is ending soon then have them exercise their option/extend.", "replies": [], "depth": 1}, {"id": "fmcv43n", "text": "Every tenant that isn't making money right now is doing this \"3 months off and maybe we'll get you back haha\" shit. There isn't much thought to it. Negotiate back, be stern but understand that these are tough times and there's probably a middle ground. Given you have no debt on this, I don't think a forebearance (read: NOT an abatement) for a month or two is such a crazy settlement. If they blow out and you have a corporate guaranty, you'll get that money one way or another (minus legal).", "replies": [{"id": "fmcxmgt", "text": "Agree with this. Brokers are bored right now and are trying to make clients happy by pushing concessions &amp; rent relief. \n\nA tenant of this size will be able to pay you back.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fmd0iu4", "text": "I was on my JLL\u2019s industrial team phone call today and we spoke about this occurrence. The way our institutional clients are combating it is requiring abundant financial information and explanation of their necessity, so hire a real estate lawyer. We\u2019ve seen that more than half of these tenants did not actually need the help but were taking advantage of the time, which is to be expected especially from high up corporate. Once they\u2019re aware of the complications associated with trying to get rent relief or their inability to provide supporting evidence to their claim of need, they should back off.", "replies": [{"id": "fmejew5", "text": "This is the approach we've suggested for our landlord clients (I'm a real estate attorney).  We put together a form response package that includes, in part, a request for proof of hardship.  As an aside, I know OP owns this building outright, but a word of caution for other owners with financing in place: check your loan documents before discussing anything with your tenants.  You may need lender's consent to modify a lease or offer a rent concession.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fmd1iac", "text": "Is it corporate backed or a franchise? Did they personally guarantee  the lease?  I can send you the letter that Allen Mattkins sent out regarding landlord rules of conduct. \n\nBasically, stay firm on tenants obligations to pay rent. Say that such abatement is not available and tenants need to pay rent on a timely basis. This is if it is a corporate NNN lease. \n\nIf it is a retail mom-and-pop, you may start deducting rent from their security deposit. In the event that they go BK, the security deposit is part of their estate and you will lose claim to it. So you want to take that now before anyone else does. \n\nIf they have been good tenants and you are interested in keeping them, work something out. If they have only a couple years left on their lease, see if you can work out an extension based on current market rents. \n\nThere are a lot of ambulance chasers out there just sending out these letters to see who the panicky landlords are. Was CBRE the one who put the tenant in there in the first place? Did they represent you in the deal? \n\nIf you own it outright and are not hurting for money you can play hardball. But a lease is a legal obligation to pay rent, and if they are not meeting their obligation they are not really tenants you want to have around. \n\nThat being said, there are eviction moratoriums in place for many places, see if that applies to you. \n\nHave them list out their financial situation, see if they have fired or retained their employees. If they have put a bunch of tenant improvements in place they are not going to be willing to walk away from that. \n\nThis is a negotiation and this is their opening salvo.", "replies": [{"id": "fmda976", "text": "This is probably the best answer but I would add one thing.  In addition to adding to the back end of the lease I would tell them you want percentage rent.  Since you\u2019re now finance partners on the bad end, you should get it on the good times.", "replies": [], "depth": 2}, {"id": "fmdce7r", "text": "This is a great response and I would be interested in this \"rules of conduct\" letter. If you could send it to me it would be appreciated.", "replies": [{"id": "fmeu03u", "text": "I would appreciate a copy too. Thank you!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmd5iof", "text": "Before you even consider it require that they submit the following: \n\nFirst, proof that they have submitted a claim to their business interruption carrier.\n\nSecond, proof that they have submitted for a loan under the CARES act.\n\nThird, audited financials for the past 12 months.", "replies": [], "depth": 1}, {"id": "fmd6pxj", "text": "https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources send them this. Loans to cover payroll AND expenses like rent, utilities, etc. They can get that money for free if they don't fire anyone. You get your money, they get free 3 months operation expenses.", "replies": [{"id": "fmda24o", "text": "I think this applies to companies with less than 500 employees. Not sure if Goodyear would qualify for this.", "replies": [{"id": "fmdcoxw", "text": "I bet they have an LLC for every location.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmda7k0", "text": "They are probably considered an essential business and should\u2019ve remained open during this pandemic.. I would look into that.", "replies": [], "depth": 1}, {"id": "fmdfe2o", "text": "Our leases have a clause where we can charge interest on overdue payments at 18%. Tell them a deferral is a loan and you will charge them 10% until paid. That will fish out how serious a request this is. \n\nIt really sounds like they are trying to bully you. We are experiencing the same. Grant Thornton asked what we could do for their $5k per month rent... my answer will eventually be nothing except a loan at 10% interest. \n\nGood luck!", "replies": [], "depth": 1}, {"id": "fmdnp2t", "text": "Use a lawyer. \n\nAs a landlord you never want to give blanket abatements. 1.) Deferrals now could be an option but I'd consider getting an addendum added to the lease where they pay back the deferral starting Sept/Dec 2020 over 6-9 months or whatever time you both see fit. \n\n2.) Another option is deferring now for x months and add x months to the back of the lease. \n\n3.) Lastly they defer now and you withdraw from security deposit. They pay back security deposit over a few months at the end of the year. \n\nIf they don't consider any of these three I think they're just bullying and you hold firm and see what they do. There is still a lease in place. Courts and evictions won't be on pause for too many months. \n\nAdditionally - You want to make sure they're not only looking to you as the sole provider for relief. Ask them for what other avenues they've checked out (SBA loan, other lines of credit, furloughed/laid off employees, have they asked other landlords and vendor for similar discounts). Take a look at leasingreality.com. Larry has been doing biweekly webinars on this exact stuff. He gives advice from both tenant and landlord perspectives. Highly recommend.", "replies": [], "depth": 1}, {"id": "fmdrfbs", "text": "A national company like Goodyear ( or savvy tenants) often retain a large group like CBRE to manage their leases or handle complex issues. This qualifies. \n\nI am a commercial property manager and got an almost identical letter for two of my office tenants today from CBRE. I bet many others did too. \nI am also getting this request in various formats from the small mom and pop to the large big boxes. \n\nSome may have the ability to pay and some may not. Is it a franchise? They might qualify for the SBA funds. Are they guaranteed by corporate? \nIf it is corporate chances are better it is just a tactic and you can be a bit more firm.  But even corporations work on budgets and without revenue they are screwed too. \n\nScrub your lease for anything that helps you. Refer them to their insurance company to review their policy- just in case. \n\nYou don\u2019t have to say yes but it\u2019s a good idea to be open to working with them. If you default them for non payment and they end up leaving, your out of pocket is only going to sky rocket and no revenue coming in for months, potentially years depending on how this crisis plays out. \n\nAt the minimum they need to pay the net charges. Ask for financials, particularly sales and monthly income statements, to prove hardship. It is essentially a new lease negotiation so get a broker to help if you can. \n\nGood luck.", "replies": [], "depth": 1}, {"id": "fmdu368", "text": "Lots of institutional tenants started doing this this week", "replies": [], "depth": 1}, {"id": "fmdv7w6", "text": "You can do forbearance, but not any form of discount.", "replies": [], "depth": 1}, {"id": "fme6hay", "text": "Agree to it but raise the rent - 2.5% more every month = long term win.", "replies": [], "depth": 1}, {"id": "fme9nf7", "text": "lol. They're trying to bully you.", "replies": [], "depth": 1}, {"id": "fmesvoi", "text": "I would wanna see financials on the location. This not only helps you decide your leverage now but when it\u2019s time to renew the lease as well. \nDefinitely ask for a longer term to the lease in exchange for any abatement or forbearance. After all this passes you\u2019ll be more secure for a long term hold or in a better position to sell to another investor.", "replies": [], "depth": 1}, {"id": "fmexm88", "text": "Very first thing you should do is dig up the lease and see what the Force Majeure clause looks like. It\u2019ll either state they don\u2019t have to pay rent or they are still on the hook. Some leases address this, some don\u2019t.\n\nSecond, ask Goodyear to show that they\u2019ve been active is exhausting all government assists. The C.A.R.E.S act that was signed in last week is specifically to help companies pay rent and employees. \n\nIf they still need one, then ask for a sales report so you can asses the damage yourself. \n\nIn the end, I would work to get a deferment rather than an abatement. This is a good time to negotiate with them as their backs up against the wall. If they won\u2019t do a deferment, see if you can get an extra year or two on you lease. That\u2019ll increase your property value significantly more than a few months rent.", "replies": [], "depth": 1}, {"id": "fmk03og", "text": "It depends largely on the language in the lease. I\u2019m currently working with a number of small family investment shops or private investors dealing with this issue. Some of the remedies have included contacting your lender about an abatement on mortgage payments, structuring a win-win abatement and tacking it on the back end of the lease, or, if you have reviewed the lease language and know where your property stacks up with Corporate Goodyear, you may be able to just tell them no. It varies by situation, so I would encourage you have your attorney and your broker/investment advisor review for you to help pay out your options. Like I said, I\u2019m currently working with clients dealing with this, so if you don\u2019t have anyone that specializes on the net leases retail side I\u2019m happy to help if you\u2019re open to it. PM me or send me an email: james.garner@marcusmillichap.com", "replies": [], "depth": 1}, {"id": "fmp51l8", "text": "Aren't they considered essential and allowed to remain open? If so, doesn't seem to make sense", "replies": [], "depth": 1}]