Tuesday, April 6, 2010

A Story: Good Deals and Bad Deals

I had lunch last week with a local reader of my blog; it turns out we have a mutual friend in the business. I had a great time and I look forward to doing it again. I'm telling you this because of a great story that my lunch companion shared with me, one which, with his permission, I want to share with you.

My friend at one time represented a large real estate developer and landlord in commercial evictions, typically for retail deals with mom and pop tenants. He looked at the leases as a litigator might, and asked his client, the general counsel, why the landlord reps were not getting more guarantees, more security deposits and other terms that might help the landlord mitigate its damages if the tenant defaulted under the lease.

The GC -- a savvy guy in my opinion based on the way I heard the story, said that my friend was only looking at the bad deals. There were also many good leases, and if there were not some bad ones out there then the landlord reps may not be prospecting hard enough to find tenants. In short? The bad leases were okay because in the mix were many, many more good leases.

The moral of this story? Not every deal is a home run or even a double. Sometimes you have to do some deals that are marginal or have a little hair on them to make sure you are doing enough deals and filling properties. Perhaps the only thing worse than bad deals are no deals at all. The key is to do more good ones than bad, and that in the end is up to the business guys. Their jobs depend on it!

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