Letter of Intent for Leasing Commercial Property

You will be reviewing a lease, writing a term sheet (letter of intent) that reflects the deal terms used in the attached lease.

Some notes on the assignment:

As Real Estate professionals, it will be important for you to understand the basics of leasing, as leasing drives revenue. Being able to review term sheets and understand what are standard “gives” and what specialty items (and understand their impact on your overall project) will help make your projects more successful. In the lease process, the terms sheet has many iterations from initial comments until it reaches final terms and the lease document is drafted form it. While items may change from the term sheet to the lease, the “major” terms/items would all be included in the term sheet, as well as any tenant specific requests (including ego terms).

I also want to point out the difference between a Letter of Intent (LOI) and a lease abstract : LOIs or term sheets summarize the major deal points and tenant specific items and are used in preparation of the lease document; lease abstracts are prepared after the lease is executed and are basically summaries of the document and a guide as to where you can find meaningful lease items. Abstracts, since written after the lease has been finalized, frequently reference the section of the lease being discussed (also, they can tend to have a lot of “legal language” if counsel has prepared).

The Homework assignment is for a LETTER OF INTENT/TERM SHEET, although written by taking an existing lease and crafting a short term-sheet from it (in essence, working backwards from how things would normally flow – or reverse engineering).

The Homework term sheet should represent the final term sheet between the tenant and the LL before the lease preparation begins (i.e. all the terms agreed to in this term sheet are consistent with the final lease document for this tenant and reflect tenant specific requests that are not standard for a tenant).

Your assignment is to read the attached lease document and create a term sheet for this lease deal. I have given guidance that the term sheet should be 3 to 4 pages in length – the actual term sheet for this deal was about 12 pages. I have not included a standard format, as one of the main learning lessons for this assignment is to figure out what are the most important deal points. Your term sheet should include the terms that you view as the most important to this deal. The challenge of this assignment is to distill the lease to its essential components and re-interpret the legal language back into business terms. This is a term sheet (or Letter of Intent) NOT an abstract, so the language should not be overly “legal.” Also, please make sure your term sheet is formatted to print out and that your name is on ALL the pages (and they are numbered).