Coronavirus Leads to Tough Landlord-Tenant Negotiations
April 2, 2020 | Les Shaver | GlobeSt.com
Many retail and restaurant landlords are in a tight spot right now. A lot of their tenants are coming to them asking for rent reductions. And, while the landlords would like to help, Noah Shaffer, senior director of asset management for Confidant Asset Management, says that might not always be possible.
“The reality is the landlord might have a loan in place that has covenants that prevent them from lowering the rent because there are income and debt service coverage ratios in place,” Shaffer says.
Landlords in those situations do have options, including going back to their lender to negotiate. “It’s forcing landlords to be creative,” Shaffer says. “The average landlord just isn’t prepared to do that on their own and figure out effective solutions for every party by themselves because they just haven’t seen this situation enough.” To prevent these sorts of discussions, Shaffer says that tenants should have loss of income insurance in place.
