Lease is Everything

The pharmacy lease checklists

In a pharmacy sale the lease decides whether the bank will lend, what the pharmacy is worth, whether the sale closes and what the seller keeps. These two checklists put the whole Lease is Everything series into a list you can work through with your lawyer, your lender and your landlord.

Seller checklist: fix the lease before you list

Use it a year before you plan to sell, and again before you list. Our minimum before listing is 10 years remaining including renewal options.

• Pull every document: the lease, the offer to lease, amendments, side letters, guarantees and the last additional rent reconciliations
• Check the facts: who the tenant is, the expiry, every option and its notice window, any default the landlord could raise
• Have a lawyer read the clauses that decide a sale: assignment, change of control, recapture, release, demolition and relocation
• Find out what a buyer's lender will need: term including options for a 10 to 12 year amortization, a landlord waiver and an estoppel
• Fix it before any buyer exists: the extension, the assignment clause, the release, and every default cured in writing
• Prepare the consent package so it goes to the landlord the day the letter of intent is firm

Buyer checklist: lease due diligence before you waive conditions

Give the lease to your lender the day the letter of intent is signed, then work through these before any condition is waived.

• The complete document chain, including the head lease if the pharmacy is a subtenant
• Term and options: what is firm, what transfers to you, and the rent you will actually pay at renewal
• The money: base and additional rent for every year of your loan, measured against EBITDA, not just sales
• Transfer and control: what the landlord can ask, what a share sale triggers, and who stays on the lease
• Hidden risks: demolition, relocation, permitted use, exclusivity and continuous operation
• Lender and regulator: the landlord documents your bank needs and the College timeline
• At closing: consent, assumption, estoppel and the seller's release, signed and in the binder

This is general information, not legal advice. Have a lawyer who works on commercial leases read yours.

The full steps are in fix the lease before you list the pharmacy, and what a lender accepts is in will the bank accept your pharmacy lease?