LAPA Conference Managing the Fundamental Terms of Leases Michael Wood Mike Dennehy 9 October 2008.

LAPA ConferenceManaging the Fundamental Terms of Leases

Michael WoodMike Dennehy

9 October 2008

Why?What is the purpose of management:• To be effective, efficient and, where appropriate, profitable• This will depend upon a number of factors

– Type of property • Commercial• Social• Community

– Legal constraints eg LGA 2002, Public Works Act, Reserves Act – Council policies and objectives

• Rent policies• reasons for holding particular properties eg for future public works

Purpose of ManagementAlso…..avoid disaster!

• Being unable to require removal of tenant’s fit out• Inadequate insurance• Inappropriate change of use depressing rents

What are the key lease terms to be managed?

• Critical dates - rent reviews, lease renewals, expiry dates, redecoration

• Landlord and Tenant maintenance obligations

• Rent and Operating Expenses

Key lease terms continued

• Assignments and Sub Leases

• Use and changes of use

• Lease expiry obligations - make good

How are these managed?• Proper understanding of the lease and the associated

legal implications

• Well informed and effective lease negotiations

How are these managed? continued• An understanding of the market and best practice

• Taking a strategic approach and understanding the wider implications

• Effective relationship management

Legal considerations• Knowing how the law affects the operation of the lease

– consider the main areas where the law is important – what you need to know in negotiating leases

– insurance and liability for damage– landlord’s consent eg to assignment, change of use,

signs, alterations– removal of tenant’s fixtures at the end of the lease

• PLA provisions in each of the above cases

Legal considerations continued• Developing an in-house lease or series of leases

– could be a set of clauses modifying the Auckland District Law Society lease

– gives structure to lease negotiations – is more efficient in setting up leases and ensuring

consistency and predictability– must be up to date in terms of law or practice

• A good database e.g. Vision Software

Benefits of a good database• Critical date diary to mitigate risk

• Protect your properties

• Preserve asset values

• Reporting

Benefits continued• Planning

• Promptly identify issues and opportunities

• Power to the property team

Case Study - Wellington City Council

• Public consultation including submissions• Recreation leases including recording compliance details

of recreation leases, one off events and outgoings responsibilities

• Property acquisitions – legislation, price, public consultations

• Property disposals – agreements, legislation, marketing, offers back, public consultation, responses

Case Study - Wellington City Council continued

• Expressions of Interest

• Heritage/Cultural

• Reserve land

Q & AContact DetailsMichael Wood

PartnerSimpson GriersonLevel 27, 88 Shortland Street, Private Bag 92518, Auckland, New ZealandDDI +64-9-977 5329 | Fax +64-9-977 5026 | Mobile 021 772 [email protected] | www.simpsongrierson.com

Mike DennehyCEOVision Software Level 1, 201 Maunganui Road, PO Box 5287, Mt Maunganui, New ZealandPH +64-7-575-6474 Ext 714 | Fax +64-7-575 8287 | Mobile 021 969 [email protected] | www.visionsoftware.com

LAPA Conference Managing the Fundamental Terms of Leases Michael Wood Mike Dennehy 9 October 2008.

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Transcript of LAPA Conference Managing the Fundamental Terms of Leases Michael Wood Mike Dennehy 9 October 2008.