Case

Lease optimization

Initial situation

A company from the healthcare sector with stores in German pedestrian zones and retail centers was caught cold by the Corona crisis. Immediate measures were necessary to ensure solvency.

Therefore B&P Bergmannpartners was tasked with negotiating terms, rent reductions or even rent suspension for a store portfolio of around 1,200 locations within a few weeks. A Herculean task that the client’s real estate department could not possibly have managed with its own resources.

The primary goals were:

  • To design payment models that preserve liquidity
  • To negotiate landlord agreements with the aim of reducing rents
  • Securing lease terms and making them more flexible

Results

B&P negotiated with above-average success. Rent reductions were achieved in more than half of the negotiations, and several rent-free months in around a quarter of all negotiations.

The savings from rent reductions and rent suspensions amounted to several million euros. While a large proportion of the savings had a direct impact on cash flow in the current fiscal year, the remaining savings were spread over the following years. In this way, the serious impact of the Corona-related slump in sales was partially cushioned and a stable course was set for recovery in subsequent years.

Average contract terms were also optimized. Extension options on the part of the tenant ensured on the one hand the necessary freedom of action for the tenant and on the other hand a solvent tenant for the landlord for further years.

Here’s how we did it

In this case, the combination of targeted back-office processes, powerful management software and property managers with negotiating skills was the recipe for success. The rent reduction project was initially divided into several stages.

  1. Contacting landlords and property managers
  2. Negotiating rents and lease terms by real estate managers in each region
  3. Follow-up of the negotiation results and transfer into legally binding addenda

The opening consisted of a contacting to all landlords and administrators of the locations to be negotiated. Individual solutions were each offered to every landlord depending on the situation and location of the store. Subsequently, intensive discussions and negotiations were held with the rental space providers. At all time, B&P took care that the negotiation results transferred the solidarity idea of the crisis to the lease. Corresponding compromises often included rent reductions/suspensions in return for an early extension of the contract.

The B&P team was supported by the in-house administration software CIMT in the accompanying contract administration and creation of addenda. This enabled contract deadlines and due dates to be monitored and adhered to in an uncomplicated yet highly precise manner. Negotiated contract amendments as well as new addenda were uploaded to CIMT and thus made available to the client in real time.

Maximum savings at minimum cost – made by B&P Bergmannpartners