COLLABORATION AND COMMUNICATION DURING COVID-19: Solutions and Survival Strategies for Commercial Real Estate and Small Businesses
By: Roseanne Hope, Hope Law, PLLC and Michelle Culligan, Culligan Legal & Business Counsel PLLC
March 31, 2020 Minneapolis, Minnesota
Collaboration, Communication, Resilience and Innovation are key to not only surviving this unprecedented time, but to being poised to thrive once the economy re-emerges from the current holding pattern. As attorneys with deep experience in commercial real estate and small business, we hosted a webinar on March 27, 2020 bringing together clients and leaders in the real estate and business community to share ideas and support each other. Information is empowering and we are encouraging others to share their successes and best practices. We are not specifically giving legal advice but are raising issues to consider and help you navigate through this uncharted territory. Of course, no one has the answer but together we can be the solution.
After talking to clients and colleagues, attending webinars, and reviewing the multitude of resources posted online, we wanted to provide a forum to share innovative ideas and resources. As you all know, things are changing every day, so it’s important to be nimble and proactive to survive the economic impact from the coronavirus outbreak. There’s no right plan for the future, but there are resources and best practices to aid your businesses to minimize the impact. Together, we can collaborate and help each other. So, we hope as you work to steady your business during this difficult time you’ll remember to:
- Be Resilient and Innovative — as leaders, we can be part of the solution. By being innovative, and taking advantage of available resources, we can minimize loss, prepare for uncertainty, stay resilient, strategize and take steps for recovery.
- Be Collaborative and Communicative – work together and tap into all of your resources and engage business partners, such as lenders, suppliers, financial advisors, brokers, accountants and attorneys. We are gathering people and information and trying to stay on top of all rapid developments. Work with your team to learn about the stimulus packages. All of us will feel some pain. Therefore, let’s collaborate– we are all in this together.
- Be Hopeful – the negative pull of pessimism and cynicism benefits no one, while the positivity of hope reaffirms and energizes. Or, in the words of Oprah and FDR respectively, “[t]he Power of Hope is Real and we can’t have both hope and fear” and “[T]he only thing to fear is fear itself.”
As we approach April 1st, rent abatement, deferral and concessions will become a big concern for tenants and landlords alike. Banks are expecting mortgage payments on April 1 and it is important to talk to your lender about restructure or forbearance. Many lenders are being proactive and this is a much different scenario from the Great Recession where the banks were experiencing financial trouble.
Even though one of the parties has a strong legal case, it can cost a lot of time and money to pursue it. Many courts are closed and there are backlogs so this will take a long time to resolve. Some jurisdictions have a freeze on evictions and government stimulus and loan deferrals may be contingent on compliance. The best solution is to work together.
We shared some Suggested Strategies and Solutions for Lease negotiations:
- Landlords: Be Proactive and Communicate. Landlords are calling tenants to offer help and keep communications open. It is important to keep tenants happy is there is not a lot of demand for vacant space today. STORE Capital sent out a memo to tenants and a link to an SBA lender and explanation of the program. In Florida, Publix waived rent and CAM for 2 months to tenants in the shopping centers that it owns. Make it easy for the tenants to respond to landlord’s expectations.
- Tenants: Be Proactive and Communicate. A tenant should articulate steps it is taking to lessen the impact. What is the cash flow and what government stimulus packages are available? Tenant should share its financials and give projections. Although this is very difficult and there is a lot of uncertainty, it is important to have the conversation. No one knows the answer and now is the time to be transparent.
- Example. An example rent negotiation could be for tenant to pay April rent, apply the security deposit to May rent and then revisit in June and defer or reduce rent thereafter.
- Discount. If Tenant pays April rent, give a 5% discount.
- Loan. Make a loan to Tenant and have them sign promissory note.
- Other Collateral. Check personal guaranties and other security. Landlord can ask to keep equipment when lease expires for restaurants as there is nominal value to the business at lease termination. A landlord may trade rent concessions for equipment as it is much easier to lease space with the equipment. However, the parties must consider leasehold financing and subordination with lenders.
- Options. Provide options—free rent can be amortized into rent or the lease can be extended to cover the free rent. It is important to work with brokers on extensions as it is hard to anticipate what the market rent will be.
- Due Date. Changing the due date to the 15th instead of 1st for a few months may help tenants with cashflow.
- Confidentiality. Each negotiation should be kept confidential. All tenants are different and should be considered on a case by case basis.
- Subleasing. Be flexible on subleasing. Perhaps grocery stores want to expand?
- Be Creative. Think outside the box. Some landlords have helped tenants learn how to promote their business by sending out promotions and assisting in curbside pick up. Employees can park in front of a building to make the parking lot look more full and show they are open.
- Work with the franchisor. What are franchisors doing? Ask? One landlord gave rent abatement for mom and pop and a match for franchisees if franchisor matched. Also some franchisors are providing counseling for franchisees.
- Talk to Lender. Remember a lease modification can require lender consent.
- Review Force Majeure Provisions. Who and what does it cover? What is definition? pandemics, quarantine, public health emergency? Act of God? Broad anything beyond reasonable control? Government restrictions, supply chain. Some big box tenants have used force majeure to close stores and stop paying rent.
We can be critical thinkers and brainstorm with each other. There are a lot of solutions and strategies that all parties need to consider and all options are on the table. It is important to work with your lawyer to ensure the lease modification covers all points and that you have reviewed all terms of your lease. It is also important to work with your broker to negotiate the right deal. Build your team and gather as much info as you can. Talk to your insurance agent, banker, broker, lawyer, accountants, architects, engineers and contractors. It takes a village. Collaboration and Communication is the way we will survive and thrive.
Maxwell took over the space and started paying rent last December. But it took her until February to get all the requisite city licenses. Meanwhile, she struggled with start-up expenses, and she had fewer kids than she expected off the bat.
At WomenVenture, a staff business analyst and volunteer attorney vetted her business model, trained her to manage the books and loaned her $9,000 to cover several months rent and other expenses. The conclusion was Maxwell had the experience and capacity to grow the business. She just needed a cash infusion to get her through the first few months.
Roseanne Hope, a volunteer WomenVenture attorney, also helped Maxwell renegotiate her lease.
Wyatt, a former CPA and business manager, said Maxwell is an ideal candidate for WomenVenture, which has shed ancillary services in recent years to focus on the growing number of female entrepreneurs who boast experience and great work ethic, but not much capital.
“Yolanda was struggling a year ago,” Wyatt said. “She had only six kids in the day care. Now she’s at 28 and there are people vying for open spots.
“You don’t want to make a loan that makes a family’s situation worse. But we have stopped looking [just] at credit scores and assets. Some of these people don’t own houses. We look at the people. And household cash flow. We underwrote based on Yolanda, her business and her family. She had experience and character. We believe the business had the ability to pay the loan. We have many successful child care businesses in our portfolio.’’
This also is a smart move by Wells Fargo and the other financial institutions, corporate, foundation and individual donors who support WomenVenture.
A disproportionate number of start-up small businesses in the Twin Cities are headed by women and minorities, including immigrants, who are long on talent but short on capital. They are not “bankable” by federally insured depositories.
Banks and foundations fund outfits such as WomenVenture, Neighborhood Development Center, Northside Economic Opportunity Network, and other nonprofits that provide training and small operating loans to help the businesses develop. Most of them are located in frayed-edged, business-hungry cities, small towns and inner-ring suburbs.
“The growth and success of diverse-owned small businesses depends on the entire ecosystem of organizations that work with and support these businesses,” said Joe Ravens, Wells Fargo’s Minnesota president, who also lauded WomenVenture.
Wyatt said the Wells grant, its single-largest private grant ever, validates its approach.
“In Minnesota, women own 35 percent all small businesses, yet they access only 4 percent of all bank capital,” Wyatt said. “And while the number of African-American women-owned business has increased by 79 percent, the average median income for African-American Minnesotans has fallen 14 percent and the poverty rate has increased.
“We have an incredible opportunity to help these women start and grow profitable, sustainable businesses.”
Roseanne Hope is excited to announce that she became a new member of the Board of Directors of Camp Fire Minnesota this Summer! On Oct. 27th, Camp Fire will be having our annual event, “Feel the Warmth – Wine, Whiskey & Beer Tasting”. Hope Law is a sponsor to this popular event benefitting Camp Fire Minnesota. It’s a wonderful organization that supports future youth leaders and helps them light the spark within by providing after-school programs and summer camps including scholarships for low-income youth. Tickets are almost sold out. Please join us if you can! Check out the website to see what other wonderful things Campfire Minnesota is accomplishing! http://campfiremn.org/Events/index.htm
Volunteer Spotlight: Roseanne Hope
Roseanne Hope is owner and principal of Hope Law, a boutique commercial real estate and business law firm located in Edina. After a 20 year career working as an attorney for large law firms like Dorsey & Whitney, Faegre Baker Daniels and Robins Kaplan, Roseanne co-founded Compendium Capital in 2009, a small woman-owned business that worked with the FDIC and failing banks during the financial crisis. She then went on to found Hope Law, a certified Women’s Business Enterprise, which serves both private and nonprofit clients. Roseanne is also a founding member of Minnesota Commercial Real Estate Women (MNCREW), an organization that is celebrating its 20th anniversary this year and that provides a supportive network for women working in the male-dominated real estate industry.
Roseanne has been volunteering with WomenVenture for over a year, teaching classes on commercial real estate for new entrepreneurs and working with small business owners one-on-one, providing lease review and negotiation pro bono. She feels rewarded when she sees entrepreneurs succeed who would not otherwise have been able to afford an attorney. As a business owner herself, Roseanne encourages entrepreneurs to stay motivated and focused through the inevitable ups and downs of business ownership. When not working, Roseanne is busy marathon training, travelling, and volunteering with a variety of organizations!
August 16, 2016
The Minnesota State Bar Association announces the certification of: Stephanie Angolkar, Iverson Reuvers Condon; Ryan Blumhoefer, Schmitz Ophaug Dowd & Blumhoefer, LLP; Jonathan Drewes, Drewes Law PLLC; Roseanne Hope, Hope Law PLLC;Timothy Netzell. Netzell Legal Services PLLC; Daniel Piper, University of Minnesota; Bradley Schaeppi, LandlordLaw.MN; Jerry Steinke, Jerry B Steinke Attorney at Law; and Alyssa Troje, Lapp Libra Thomson Stoebner & Pusch Ctdas a MSBA Board Certified Real Property Law Specialists. This Certification program is administered by the MSBA and approved by the State Board of Legal Certification.
The certified specialist designation is earned by leading attorneys who have completed a rigorous approval process, including an examination in the specialty area, peer review, and documented experience. Certified attorneys have demonstrated superior knowledge, skill and integrity in their specific field and can use the designation of specialist to advertise their credentials. The MSBA has been accredited as an independent professional organization for certifying attorneys as Criminal Law Specialists, Real Property Law Specialists, Civil Trial Law Specialists and Labor and Employment Law Specialists. This achievement has been earned by fewer than 3% of all licensed Minnesota attorneys. More information about Certified Legal Specialists is at http://www2.mnbar.org/certify.
With over 15,000 members, the MSBA is the state’s largest and most influential voluntary organization of attorneys, providing continuing legal education and public service opportunities for lawyers, and assistance to the legal system. The MSBA has been accredited as an independent professional organization for certifying attorneys as Real Property Law Specialists since 1988.
May 24, 2016
For Immediate Release
HOPE LAW PLLC NETS NATIONAL CERTIFICATION AS WOMEN’S BUSINESS ENTERPRISE
Contact: Roseanne Hope, Hope Law PLLC
Minneapolis, Minnesota. Commercial real estate law firm Hope Law PLLC has been awarded national certification from the Women’s Business Development Center (WBDC), a regional certifying partner of the Women’s Business Enterprise National Council (WBENC).
“The national standard of certification by WBDC is a meticulous process, but one well worth the effort– especially if organizations want to demonstrate a true commitment to fostering diversity,” said Hope Law principal Roseanne Hope. “We are proud to be recognized as a Women’s Business Enterprise, and we look forward to working with industry and government partners that share our commitment to promoting women-owned businesses.”
The rigorous certification process includes an in-depth review of all facets of the business as well as a site inspection. Certification confirms that the business is at least 51% owned, operated and controlled by a woman or women.
The mission of the Women’s Business Development Center (WBDC) is to provide services and programs that support and accelerate women’s business ownership and strengthen their impact on the economy. By including women-owned businesses among its vendors, corporations and government agencies demonstrate a commitment to fostering diversity and to the continued development of their supplier/vendor diversity programs.
About Hope Law PLLC
Hope Law helps corporations and government entities satisfy their supplier diversity requirements by providing high-value, cost-effective commercial real estate legal advice. Hope Law delivers corporate real estate services that combine the efficiency of in-house counsel with the perspective of an outside real estate practitioner. Representing a diverse group of small to mid-sized clients, Hope Law PLLC works with real estate developers, lenders, private equity investors, corporate real estate departments, small business owners, women entrepreneurs, non-profits and other institutions. Hope Law also has advised owners on a variety of properties, including office, medical facilities, mixed-use, shopping centers, national retailers, industrial and manufacturing facilities, hotels and resorts, and single/multi-family residential units.
Principal Roseanne Hope, with over 25 years of experience, understands the powerful impact that women-owned businesses have on families, community and the economy. This is her second successful start-up. In addition, Hope is co-founder of Minnesota Commercial Real Estate Women (MNCREW), and also served as its first president. She is a former board member of the Women’s Foundation of Minnesota, and Ms. Hope currently teaches real estate courses and provides pro bono legal counsel to women entrepreneurs at Women Venture.
For more about Hope Law, visit www.hopelawoffice.com.
The Women’s Business Enterprise National Council is the nation’s largest third party certifier of businesses owned and operated by women in the United States. WBENC is a resource for the more than 700 U.S. companies and government agencies that rely on WBENC’s certification as an integral part of their supplier diversity programs.
by Ann Drew Yu, Life Coach and Creator of The Intention Program™
Recently, I had the pleasure of doing a Feng Shui consultation with Roseanne Hope, principal attorney at Hope Law PLLC, as she prepared to open her new law office. We spent 90 minutes together, preparing her new office space, discussing her intentions for Hope Law, and revisiting the fascinating path that led her to this point.
Below are highlights from our conversation.
Why did you decide to open Hope Law?
I like being an entrepreneur. In 2009, I started Compendium Business Strategies with Julie Tanaka and Bren Buckley. We consulted with the FDIC and financial institutions and invested in and restructured pools of distressed commercial real estate assets.
In 2013, when the economy began to recover, I decided it was a great time to take a break and pursue a dream I’d had for years – traveling around the world. I spent time doing incredible volunteer activities – teaching English in Thailand, jobs training for trafficking survivors in Nepal, and developing social justice curriculum for law schools in Southeast Asia. These positions allowed me to give back and meet people from all over the world who were making a difference. I loved it!
Other adventures I pursued were riding an elephant bareback in the jungle, paragliding in the Annapurnas, sailing and snorkeling (and trying to dive) in the Great Barrier Reef, climbing Kilimanjaro, and trekking to Machu Picchu.
In 2014, when I came back from my adventure, everything felt like a fresh start. I eased into the transition by pursuing another dream – writing a memoir about my travel experience. This process helped me reflect on what I wanted next, and the answer became clear.
I wanted to open my own firm (Hope Law), get back into the corporate world, and return to the professional work and relationships I’ve devoted myself to for twenty-five years. Although I loved writing and will still work on my book in my spare time, I like to collaborate with people and help them close deals. It’s a wonderful sense of accomplishment and teamwork that energizes me.
What do you like about your industry?
I love that I have an opportunity to work with smart, sophisticated people in a collaborative team approach. That’s very satisfying and stimulating. As one of the founding members of MNCREW 20 years ago, it’s been rewarding to see the great progress women in our industry have made. I also like that it’s fast-moving with a lot of different components and variety. No deal is the same.
When you and I worked on your office, we spent time identifying your intentions for Hope Law. Would you share some of them?
Sure, first and foremost, I look forward to doing quality work with people I’ve built relationships with and served for 25 years, plus working with the new clients I’ll meet along the way. I’m fortunate to have many friends in the legal and real estate fields who have helped me get started through referrals and sharing marketing strategies and administrative secrets.
Of course, I intend for my business to be profitable and to be rewarded for my efforts. However, being a business owner can be consuming, and it’s important to me to keep balance in my life. Running, skiing, cooking and spending time with friends and family are my passions. I love to travel and explore the world, but I think I got the wanderlust out of my system…for a while!
Also, I want to make a contribution and give back to the industry. I’m planning to mentor young women in the field through MNCREW and other venues. I am training new women business owners in entrepreneurial skills, real estate and business law at Women Venture. And finally, my succession plan includes eventually bringing on a younger attorney to work with me.
Your new office is in the Pinehurst Building at 50th and France. I understand that you did the legal work for the redevelopment 15 years ago. That is a fascinating backstory. Was that a coincidence?
Ha! No it’s not a coincidence. Actually, it’s a fortuitous result of a long-term professional relationship. When I was practicing law at Dorsey and Whitney several years ago, I worked with Tom Lohmann, Dan Wozniak and Paul Maenner on all parts of this deal-the original acquisition, redevelopment, financing and leasing of this property. In addition to working on leases for this property over the years – most recently on the new Edina Realty office – I’ve also worked with them on other projects. Over time, we became friends.
When I decided to launch my practice in January, I gave them a call to let them know. They said, “We have a project for you to work on. And, why don’t you come office here?” It was a perfect set-up, close to my home. It’s a beautiful property in a fantastic location. I’m proud to have played a role in its development. I feel fortunate to be here.
Hope Law PLLC is a boutique real estate and business law firm providing strategic, confidential and expert advice for small businesses, private equity investors and corporate real estate departments. Principal Roseanne Hope has been advising clients on real estate leasing, acquisitions, financing and operations for 25 years. Her new office is conveniently located at 50th and France in Southwest Minneapolis.
Ann Drew Yu is a Minneapolis-based life coach and creator of The Intention Program. In addition to helping clients cultivate mindfulness and positivity, she is a certified Feng Shui consultant who helps clients create work spaces that are professional, prosperous, and balanced.