When Jonathan Keyser founded the company that bears his name, he set off with a mission to be a different kind of commercial real estate firm. It’s stated in the company mission, which is to be “one team, built on service.”
“Our whole mission at Keyser is to change the industry by proving that you don’t have to be ruthless in a cutthroat industry like commercial real estate to be successful,” said Keyser. “We’ve built our firm on the concept of success through selfless service. So, what better time to demonstrate selfless service than a time like today when everyone is in need of good real estate advice.”
Keyser, both the company and the man, has been working non-stop since the start of the COVID-19 pandemic that has slowed the United States economy to a crawl. The team at Keyser has helped companies across the country negotiate thousands of rental deferments with their landlords. With many businesses shut down, companies are struggling to maintain their staffs and pay their rents. Keyser has been working to help these companies by negotiating rental agreements with the landlords.
“There are many forms of relief, but the most common we are seeing today is 2-3 months of rental deferment. So as an example, you don’t have to pay rent in May, June, and July, but then over the next 9 – 18 months, those three months of relief are paid back on top of rent,” Jonathan Keyser explained. “We’re also negotiating deferments where the companies push the deferred rent to the end of the lease agreement, and we are also renegotiating leases and extending them in exchange for concessions today.”
While those are the most common forms of rental relief that the team at Keyser is negotiating, everything in commercial real estate is negotiable, so Jonathan Keyser provided us with some valuable advice for tenants who find themselves in need of rent relief as this extended economic shutdown stretches into May.
Be ready to negotiate
Keyser has helped thousands of tenants negotiate with their landlords, who typically have one of three responses to rental relief requests. First, there is a sizeable group of landlords who are just completely rejecting all initial requests for rental relief. “Out of the gate, about 25 percent of landlords are saying, ‘absolutely not. Pay your rents, or else,’ ” Jonathan Keyser said. “But, once we start to negotiate, we tend to chop that number down significantly.”
The largest cohort of landlords fall into the “prove it” group. These landlords are signaling that they are empathetic to companies in need, but they don’t want healthy tenants to take advantage of this situation, so they are asking that tenants prove that they have hardships. If they can, in many cases these landlords are entertaining working with them on some form of rental relief structure. Jonathan Keyser cited Prologis, the largest industrial landlord in the world, as an example of a company who has taken this approach.
The third group, which is only about 10 to 15 percent of landlords, has been proactive and reached out to their tenants on their own to offer a rent relief plan.
“The Irvine Company is an example of this,” Jonathan Keyser said. “They reached out to their tenants and said, if you need it, we’re going to give you 90-day deferment. This was welcome news to a number of their tenants who considered it critical to get some relief.”
Keyser noted that many of the larger landlords are working from the same response playbook.
“The larger landlords have been counseled by the legal community, who has been advising landlords to ‘show empathy, but be firm.’ That’s the advice that is coming to all of these big landlords,” he said. “Most of them are using form letters to respond to tenant requests. So literally, different landlords, totally unrelated firms, will be sending our clients the exact, I mean word-for-word, verbatim, the same communication. So it’s clear that they are coordinated and they are all trying to figure out and navigate this whole situation for themselves.”
“What I would advise tenants is that your landlords’ first response is typically not their best response, so the key as the tenant is to demonstrate persistence and a mindset of workability.”
Be organized, be clear, be present
So how does a tenant demonstrate that they are ready and willing to work with their landlord to come up with a solution? Jonathan Keyser said what not to do is stop paying rent and not communicate.
“Unfortunately, there is a lot of bad advice out there as some brokers and attorneys advise tenants to just stop paying their rent. I couldn’t disagree with this advice more. The clients that are just not paying and not communicating are the ones that are not receiving much help,” he said. “The key is to communicate and collaborate, figure out where the landlord is coming from, and try to find a creative win/win/win solution. Remember, landlords are experiencing pain too, and at the end of the day, we are all in this together, and we need to work together to get through this.”
Keyser said the best approach to take with your landlord is to be organized and have all the necessary data ready to show the landlord that rental relief is necessary. He said data should take a past, present and future look at your company finances. In the data provided to the landlord, clearly demonstrate where you were before the shutdown and what your financials looked like leading up to March of 2020. Then, show the current financial data and project what your future numbers will be as the economy reopens.
“Demonstrate, not just verbally, demonstrate using data what the impact has been,” Jonathan Keyser said. “Then, be very clear about how long you think this impact is going to affect you.
“What we’re telling our clients is that you have to be very organized demonstrating your hardship and be very specific in your relief requests”, said Keyser.
He also stressed that having a clear picture of what your company needs and why really helps the landlord understand how to best support you as a tenant.
“What are you asking for? Have a very clear request,” he said. “If you’re saying, ‘Hey, I’m in trouble, I need help,’ but without a clear request, landlords are less likely to respond because they need clarity and they are sorting through thousands of these requests across the board.”
While the Keyser company has already worked out deals on behalf of thousands of tenants nationwide, as the economic shutdown continues well into May, the expectation is that more work will need to be done. Jonathan Keyser said he expects that he will have to go back to many landlords on behalf of clients to work out extensions as the weeks roll by with many businesses still sitting on the sidelines and waiting for the pandemic to recede.
If that’s the case, Jonathan Keyser said his company will continue to serve its clients with the same effort that has been shown for the past two months.
“Our team has been amazing at figuring out how we can serve people in this time of crisis, and it’s brought us as a company together in a really cool way,” he said. “We’re going to be so much stronger on the other side of this crisis because we have served so many people. It may not be the most profitable work today, but on the other side of all this, the people we served during this time will be very grateful for what we’ve done and we’ll have much stronger relationships on the other side.”
