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May 31, 2024
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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...
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