How corporate trade can eliminate your cost of unwanted leases

Fake Pastry Palace buildingThings change.

That beautiful, must-have additional space of four years ago has now become an unwanted drag on your cash. Or, you’ve fallen out of love with that franchise you own but are locked into a building lease for 4 more years. Or, due to your growth, you need bigger space in another building, but you’re being held to three more years on your current space.

Normally, the solution to these problems is complicated and expensive. Not so using corporate trade to eliminate your expense on unwanted leases.

Even though lease problems like those mentioned above involve vastly different circumstances, all can be solved by simply providing the lease-holder with the cash necessary to make the mandated lease payments. Face it, if someone gave you the cash to make your future lease payments on unwanted space, your problem would be solved, wouldn’t it?

That’s exactly what corporate trade can provide you. Just place a portion of your normal advertising through the trading firm, and capital can be raised to cover your lease expenses.

Yes, lease arrangements can be very different. Yours may not permit a sublease, or it might have several onerous restrictions on who can be a sub-tenant. That’s okay. The trade arrangement can simply provide you with the funds to make your regular lease payments, and the space will remain unoccupied. Perhaps a subtenant is allowed and one is found. Since more cash will go into the trade transaction, the portion of media needing to be placed will likely be less and therefore the transaction will be quicker.

Example Scenarios:

1. You have three years remaining on an office space that you’ve outgrown for which the remaining commitment is $1.8MM. The current market value for the space is now $900,000, and you are unable to make up the remaining $900,000. The solution is for Evergreen Trading to pay you $900,000, and in return, you place $6MM of your budged TV and radio broadcasting. Since your annual budget is $48MM, the $6MM of adverting needed for reimbursing the $900,000 is a relatively small portion. You assign the lease to a subtenant for the remaining 3 years, and your out-of-pocket costs for the lease has been reduced to zero.

2. You built a building for your corporate offices, within which is 50,000 square feet of unoccupied space you wish to lease for $1MM annually. The market for that type of space has fallen since your original plans, and you have been unable to find a tenant at anything near the right lease price. The solution is for Evergreen Trading to immediately pay the full $1MM asking lease price for the first year. The point at which a subtenant has been secured, Evergreen Trading will pay the difference between the asking price and the lease price agreed to by the leasee. In return, you place through Evergreen Trading a portion of your digital and broadcast advertising – the portion being determined by the amount of funds paid to you by Evergreen Trading. As a result, you receive your full asking price for the full term of the lease.

3. As a franchisee of a large restaurant chain, you have 4 more years remaining on your $100,000 annual lease. Your agreement with the franchisor is that if you end your franchise agreement early, you are responsible for 75% of the remaining lease. To end your agreement now (4 years early) would result in a payment to the franchisor of $300,000. The solution is for Evergreen Trading to place $4MM of the Franchisor’s $32MM annual budget. The Franchisor agreed to allow part of their advertising to be used to repay the lease because Evergreen Trading provided the franchisor with an additional 10% of media for the existing dollars they are currently paying for their advertising.

As with all corporate trade transactions, our flexibility allows us to accommodate most scenarios. The above three examples were very different, but all found their solution in the trading programs of Evergreen Trading.

Just in case all his sounds too good to be true, see our last post called “Are the promises of corporate trade too good to be true?”

Call us and find out how we can empower you to solve your lease problems.

About Mike Lake

Mike is the Senior Vice President of Marketing for Evergreen Trading. When not playing jazz trombone he is probably obsessing about writing content that will capture the attention and interest of business people and fellow learning junkies everywhere.

Comments ::

  1. Wow what a great piece! I use barter all the time, I trade with ITEX Barter in Toronto. They always have great purchase opportunities and I sell what I want, when I want, it’s such a great tool for me. You can check them out at http://www.creativebarter.ca and you’ll see what a great organization they are. I’ve sold so much and purchased vacations, business equipment, things for my home, appliances, residential and office furniture and more. I really recommend them!

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