Presenting a live 90-minute webinar with interactive Q&A Negotiating Exclusive Use and Restrictive Covenant Provisions in Office and Retail Leases Balancing Competing Interests and Protecting Rights of Both Landlords and Tenants THURSDAY, APRIL 2, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Scott L. Weber , Partner, McGuireWoods , Richmond, Va. Edmund S. Pittman, Partner, McGuireWoods , Richmond, Va. Lindsey D. Chase, Counsel, McGuireWoods , Richmond, Va. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-961-9091 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.
FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: In the chat box, type (1) your company name and (2) the number of • attendees at your location Click the SEND button beside the box • If you have purchased Strafford CLE processing services, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form). You may obtain your CLE form by going to the program page and selecting the appropriate form in the PROGRAM MATERIALS box at the top right corner. If you'd like to purchase CLE credit processing, it is available for a fee. For additional information about CLE credit processing, go to our website or call us at 1-800-926-7926 ext. 35.
FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: Click on the ^ symbol next to “Conference Materials” in the middle of the left - • hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. •
Negotiating Exclusive Use and Restrictive Covenant Provisions in Office and Retail Leases Click to edit Master title style April 2, 2015 Scott L. Weber Edmund S. Pittman Partner Partner McGuireWoods LLP McGuireWoods LLP sweber@mcguirewoods.com epittman@mcguirewoods.com Lindsey D. Chase Counsel McGuireWoods LLP lchase@mcguirewoods.com www.mcguirewoods.com www.mcguirewoods.com
I. RESTRICTIVE COVENANTS McGuireWoods | 6 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Introduction – What is a “restrictive covenant”? – Why would a Landlord be in favor of a restrictive covenant? – Why might a Tenant also seek a restrictive covenant? – Considerations in an Office vs. Retail Context McGuireWoods | 7 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Sources of Restrictive Covenants – Lease / Sublease Documentation • Body • Exhibits • Rules and Regulations (often subject to change) – Recorded Instruments • REAs / OEAs / CC&Rs / Declarations / Deeds – Master Lease / Ground Lease – Condominium Documents – Consider Also: Zoning McGuireWoods | 8 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Permitted Use – Scope • Landlord Considerations vs. Tenant Considerations – Relative bargaining power of Landlord and Tenant important • Tenant’s ideal is “any lawful use.” • Subject to recorded restrictive covenants and zoning, whether stated or not. • Change in use often subject to LL approval. – Office Context • “General office use” vs. a specific type of office use. • Ancillary uses, such as storage. • Call centers. McGuireWoods | 9 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Permitted Use, Cont. – Drafting Considerations and Practice Pointers • If narrow, should be broad enough to capture Tenant’s use. • Flexibility probably more important in retail than office. • Assignment and Subletting Restraints McGuireWoods | 10 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Prohibited Uses – Specific List in Lease / Sublease Documentation • More Common in Retail Leases • Common Categories in Retail Leasing – Parking Considerations – Noxious Uses – Outside Sales / Marketing Activities – May Be Found in Recorded Documents – Exclusives Granted to Other Tenants • Complete list (may be scheduled) vs. simple reference to existence. • Duration Considerations – “Subject to the terms of existing leases” • Change in use and/or assignment and subletting by existing tenants McGuireWoods | 11 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Prohibited Uses, cont. – Restrictions on Landlords • Radius Restrictions • Protected Areas • Exclusive Use Rights • Future Development Constraints McGuireWoods | 12 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • General Restrictive Covenants – Categories – Construction Limitations / Architectural review boards – May be Multiple REAs / OEAs (large centers) – Parking Restrictions – Signage Restrictions – Easements and Access McGuireWoods | 13 CONFIDENTIAL
I. RESTRICTIVE COVENANTS • Drafting Considerations and Practice Pointers Regarding General Restrictive Covenants – Diligence (T wants disclosure of all relevant restrictions) – If approval is required, should be condition to effectiveness of Lease. – T wants a representation from the Landlord that its use does not conflict with restrictive covenants found outside of the Lease, and that no approval is required thereunder for its use and/or its improvements and signage. – Limiting rights / reserving rights to modify or impose new encumbrances. – T may want to request an estoppel from an association or other third party. McGuireWoods | 14 CONFIDENTIAL
II. EXCLUSIVE USE PROVISIONS McGuireWoods | 15 CONFIDENTIAL
II. EXCLUSIVE USE PROVISIONS • Introduction – What is an “exclusive use provision”? – Considerations in Office vs. Retail Contexts – Rationale • Tenant Mix • Reputation of Property / Center • Restricting Competition • Parking • Access Points • Relationship to Percentage Rent McGuireWoods | 16 CONFIDENTIAL
II. EXCLUSIVE USE PROVISIONS • Drafting Considerations – What is the exclusive for? • Scope • Relationship to Permitted Use • Implications for Center Leasing • Possible Parameters – Context important. – Know your client’s business and what’s important to them. • Office Leasing – Restrictions on “Competitors” – Relative bargaining power of parties important. – Broad restriction vs. specific list – Future modifications McGuireWoods | 17 CONFIDENTIAL
II. EXCLUSIVE USE PROVISIONS • Drafting Considerations, cont. – Are there any exceptions to the exclusive? • Rights of Existing Tenants • Big Box / Anchor Tenants • Incidental Uses – How far does the exclusive reach? • Identity of Landlord • What if the Landlord sells property, or acquires property? • MOL’s McGuireWoods | 18 CONFIDENTIAL
II. EXCLUSIVE USE PROVISIONS • Drafting Considerations, cont. – Does the exclusive flow to potential subtenants and assignees? • Assignments to affiliates and permitted transferees • Nevertheless bound by the permitted use, and any prohibited uses. – How long does the exclusive last? • Discontinuance / Abandonment • Events of Default • Change in Use • Relationship to Operations Covenant • Could Give Rise to Default or Right of Recapture McGuireWoods | 19 CONFIDENTIAL
III. SIGNAGE RIGHTS McGuireWoods | 20 CONFIDENTIAL
III. SIGNAGE RIGHTS • Introduction – What are “signage rights”? – Why is signage important to LL vs. T? – May be more relevant for certain types of retail tenants. • Common Types of Signage – Monument / Pylons – Building Façade • Considerations in Office vs. Retail Contexts McGuireWoods | 21 CONFIDENTIAL
III. SIGNAGE RIGHTS • Signage Restrictions as De Facto Leasing Restrictions – Tenant’s concerns – Landlord’s concerns McGuireWoods | 22 CONFIDENTIAL
IV. REMEDIES AND DAMAGES McGuireWoods | 23 CONFIDENTIAL
IV. REMEDIES AND DAMAGES • Tenant Violation – Typically, a simple default for all types of restrictive covenants. – Usually entitles LL to all rights and remedies upon a T default, subject to applicable notice and cure (if any). – LL may wish to shorten cure rights for certain defaults ( e.g. , violation of noxious use restriction, signage violations, violation of another tenant’s exclusive). – Self-help in favor of LL (e.g ., sign removal, etc.). – Injunctive relief. – Consequential damages limitations. McGuireWoods | 24 CONFIDENTIAL
Recommend
More recommend
