Corporate tenant vetting process /consultant

4 Replies

What is the best way to vet an unrated (Corporate credit rating), up and coming nationally expanding corporate tenant? Their Dun and Broad Street risk assessment is very high with PAYDEX score:65 and delinquency predictor percentile:9

I have their financials in very condensed format and they are not willing to give any more information than what they provided.

They are asking for about 100K in tenant improvements with 10-year lease term, and I have to pay about 100K in broker commissions upfront for total lease value of about 1.5M over 10 years, which seems to be a very risky deal.

How do you go about vetting these kinds of tenants? Do you know any consultant/specialist who can navigate me through this situation?

Tell them to provide full financials or they can pound sand. I would not want to lease to someone who wouldn't be fully transparent about their solvency or ability to perform.

Originally posted by @Cason Acor :

Tell them to provide full financials or they can pound sand. I would not want to lease to someone who wouldn't be fully transparent about their solvency or ability to perform.

I am new to tenant screening process. Is there any one here, or a consultancy service that can help me through navigating the their condensed financial reports and DnB report? 

Looks like you are paying about 6.5% in leasing commissions to the tenant rep broker. That is very high. You might see 6 split 3/3 if 2 tenant brokers or if one usually 4% of primary lease term value.

Just remember this it's not only about the cash flow but the lease structure you agree to today affects your cap rate sale value in your future.

You could let them put in their OWN TI themselves and have a condition contractors are certified and that they cannot lien the property etc. You need a commercial attorney to work on the lease for protections to you. Will cost thousands of dollars or more to do that part. Additionally if tenant is weak you could pay smaller partial payment to tenant broker upon tenant getting certificate of occupancy and paying rent on time and then tenant rep leasing broker gets smaller payments over time as the tenant stays and pays. If they go dark or default and do not cure per the lease you no longer own ANYTHING to tenant rep leasing broker.

There is a ton on the commercial side that goes into a  successful lease for a landlord.