Exit And Restructuring Strategies For Retail Deals (With Form)

The Practical Real Estate Lawyer


ENTERING INTO a retail deal, regardless of whether it involves a lease, ground lease, or pad sale, takes optimism.  Each party enters into a new venture that it fully expects will be a mutual success. Unfortunately, the success of a retail enterprise relies in large part on the discretionary income of often fickle customers. The hottest concept one year may be old news the next season. Thus, the positive expectations that abound at the front end of a retail deal must be tempered with a certain degree of skepticism. Both sides need to craft exit tools, if the retail operation does not succeed. This article will address options for restructuring or, if need be, exiting a retail relationship.  The discussion will focus primarily on leasing, but will also touch on arrangements in which a retailer owns a pad that is part of a larger development.