Landlord offers reduced rents to tenant in exchange for equity in tenant's business
I've been thinking about different types of finance vehicles lately and thought of this one. Has this been done before? Thoughts on this deal?
I've been thinking about different types of finance vehicles lately and thought of this one. Has this been done before? Thoughts on this deal?
+40 | Case-Shiller Showing Higher Ratio Than Ever Recorded Before - Are We In For a Collapse in Housing? | 15 | 5m | |
+38 | Launching Own Shop | 20 | 3d | |
+38 | Extremely Salty After This Process | 32 | 23h | |
+27 | Megafund REPE Comp | 7 | 1h | |
+26 | Am I right to be kinda pissed about this? | 8 | 2d | |
+25 | Alternative to Starting A Shop | 5 | 1d | |
+25 | Quick mental math question | 8 | 3d | |
+20 | Is NYU Schack (BS) worth it for Commercial RE/REPE/REIB | 12 | 4d | |
+15 | Tightest Historical Spreads for CMBS SASB and Conduit | 2 | 2d | |
+15 | Compensation: Real Estate Development | 7 | 2h |
Career Resources
You get this idea from the show Silicon Valley lol?
I think SV got the idea from the real world. Isn't that the typical startup incubator model - sponsor gives resources, often guidance or networking and possibly including office space, gets equity in return
Federal Realty does this for retail, dont know what terms though.
A guy I used to work for did this all the time. He was part of an angel investment group and would often split deals with other HNW individuals and give free or discounted real estate in lieu of cash.
Leasing agents can take equity instead of a commission on retail deals. Other than that I haven't seen too many of these.
Not exactly the same concept, but some retail landlords will accept a lower rent in order to have a percentage rent clause, This is usually done over a natural breakpoint, i.e. 7%. However, due to the state of retail, it is diminishing in popularity.
Bachmanity
.......
going to be tough to service your debt with equity payments
Didn't think about that, thanks
Interesting concept and a terrible business move, either by the landlord or tenant. Almost all start-ups fail, making it a terrible gamble (not really even a calculated risk) for the landlord, and if the start-up has a reasonably high chance to succeed it's an awfully expensive way to service your rent as a tenant.
Yes, large private retail developer I know does this.
PayPal’s landlord accepted equity when the company first started. The landlord at that time is a near-billionaire today and a close friend to the Mafia.
So yes, this model has existed since at least the beginning of the Internet.
It's called percentage rent. A shit load of malls do this in the US. It's not for equity as landlords are not that stupid to take a chance on some retail business. For office maybe, but again that's been done with incubators etc...
Consequatur ut beatae quam ut magni recusandae. Temporibus consequatur quod consequatur ipsum rerum. Repellat ut aut aperiam perspiciatis ea. Voluptatem quod est est accusantium est illum ratione.
Ratione iusto necessitatibus consequatur quis ut facere esse. Ipsam numquam debitis quisquam. Soluta est voluptates voluptatem sed officia voluptatem. Dolores aut voluptatem laudantium quos perspiciatis vero.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...