Don't Give Rent Relief Without Any Strings Attached

In today's economic slowdown marked by slumping sales, many retail tenants are increasingly asking for rent concessions, and, in an effort to retain tenants, landlords are acquiescing to such requests. There are several different types of rent relief, ranging from an all inclusive “gross” rent, to a temporary reduction in base rent, or converting the economic terms of the lease from fixed rent payments to a “percent in lieu” deal, where the tenant's rental obligation is based on a percentage of gross sales generated at the premises. The duration of the rent reduction (referred to herein as the “Relief Period”) typically lasts only one or two years. All too often, however, rent relief and other incentives designed to keep a tenant in place are given without any strings attached, thereby denying the landlord some flexibility should market forces swing back more favorably in the landlord's direction.