Top reasons why CRE Leasing deals fall through.
Financing is probably #1. What are some other reasons why CRE deals fall through?
[{"id": "frc0gkx", "text": "Due diligence discovery", "replies": [{"id": "frc45fn", "text": "Interesting. Can you please elaborate on this? What does this actually mean? Example?", "replies": [{"id": "frc4ml2", "text": "It is pretty broad, but could be something as simple as the HVAC unit is broken and the lease states the property has to be accepted as-is, presence of asbestos, or the ground contains chemicals that make development expensive (if it is a ground lease).", "replies": [{"id": "frc8jnp", "text": "Makes sense. Is there checklist for tenant and landlord due diligence?", "replies": [{"id": "frd7pcp", "text": "https://propertymetrics.com/real-estate-due-diligence-checklist/\n\nI\u2019m sure you have to pay for it, but scroll down and there are a lot of examples. Probably more if you pay for it.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "frc2pru", "text": "Pandemics", "replies": [], "depth": 1}, {"id": "frc2stb", "text": "The buyer was never going to afford it anyways, they just inquire on properties out of their league.", "replies": [], "depth": 1}, {"id": "frc8vur", "text": "Time kills all deals. Most of the stuff I\u2019ve seen fall apart was because the LL or Tenant was too slow to pull the trigger or too much time was spent trading LOIs focused on minutia.", "replies": [{"id": "frcch33", "text": "100% last year I had what I\u2019d consider my first large deal. It was for the sale of a 3M office building in my area I was representing. The building had two owners one who was all for the sale the other thought he could get more money even after I showed him they were offering 20% higher than the market value (it was an OZ fund willing to pay a little over). Well the 2nd owner finally agreed for me to counter but by the time I countered over 25 days had passed and they found a better deal. This fund went on to buy 4 other properties in my city. I was beyond frustrated.", "replies": [], "depth": 2}, {"id": "frcnuh2", "text": "Ditto 10000%", "replies": [], "depth": 2}], "depth": 1}, {"id": "frchptm", "text": "Financial approval from board/CFO fails.", "replies": [{"id": "frcjvw1", "text": "If that happens, that's not a company you want to work with.  Granted, for some companies, like retail companies, we could be talking about an update to the underwriting which results in no longer achieving hurdle, but those companies have the leverage to push those types of terms.  \n\nAnd the big ones will at usually pay for expenses to make the parties, seller and broker, whole.", "replies": [{"id": "frehtwv", "text": "The question say\u2019s CRE Leasing. I don\u2019t know of any tenants discussing hurdle rates. Fortune 500 firms shoot down lease deals for financial approval all the time.", "replies": [{"id": "frekzsh", "text": "Yeah, because large retail tenants don\u2019t lease space, you\u2019re right.  It\u2019s not like a new store deal\u2019s return could be based on a hurdle rate.", "replies": [{"id": "fren5ib", "text": "Exactly, they don\u2019t hit a required return for a new store, and CFO/board doesn\u2019t give financial approval for the lease. Happens all the time.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "frcjpej", "text": "Retrades that are unreasonable.  Some buyers low ball knowing they will wait until dd expires and the property have been under contract for a few months, and they they can retrade knowing the buyer is just waiting to close and hopefully won't want to go through the time and energy of relisting.", "replies": [], "depth": 1}]