There’s nothing wrong with some crushes. I still have one on my wife. Other kinds of crushes; however, are best avoided. My purpose in this article is to help you avoid the kind of crush that can have a dramatically negative impact on the value of your commercial real estate. Over the last couple of years I have encountered two situations with lease provisions that afforded the lessee the opportunity to purchase the property at a set price. In both cases, because property values had subsequently increased, the lease provision had a capping effect on the value. In one case, the ‘capping’ effect reduced the value of the interest by nearly 50%. I sincerely wished that the property owner had consulted me or someone else who would have helped him avoid this costly mistake.
I’d love to hear your feedback. Have you encountered similar circumstances?