Contact: Ann Marie Mehlert, Lerch, Early & Brewer (Maryland, USA)
You are tasked with handling the due diligence for a commercial real estate loan. The dollar amount of the loan is based on the rental stream from leases on the property. Sitting on your desk is a pile of leases - some longer than a hundred pages. On top of that pile is a rent roll given to you by the borrower. What do you do with the pile of leases? Reviewing several hundred-plus pages of leases can be daunting, but the importance of this review cannot be understated. Not only does the review need to substantiate the cash flow presented on the rent roll, but it also needs to red flag certain provisions that impose extraordinary obligations on the landlord - remember, the lender could someday step into the shoes of the borrower/landlord.
Read on to learn what questions you must ask when reviewing these commercial loans at "The Top Questions Every Lender Should Ask When Reviewing Commercial Leases."
Ann Marie Mehlert is a real estate attorney at Lerch, Early & Brewer in Bethesda, Maryland who works with real estate developers, investors and owners on all aspects of commercial real estate. For more than 25 years, she has negotiated and documented transactions from acquisition and financing through development, leasing and sales. For more information on reviewing commercial leases, contact Ann Marie at (301) 907-2803 orammehlert@lerchearly.com.
This article originally appeared in Lerch Early's Commercial Lending Bulletin. To subscribe, visit http://www.lerchearly.com/publications/7.
