Situation

Built in 1964, one of the original leases was Firestone Auto Center with 10,000 square feet.  The annual rent with limited CAM was $4.00 a square foot, significantly under market.  They had run out of options, so we contacted them to do a new lease with updated rent and term.  We were unable to reach them, and they seemed to be ducking us.  We weren’t sure if they were planning on leaving which seemed doubtful as they did a very good volume of business.  The issue was what to do now. 

Strategy

We decided that they were going to terminate and that is why they would not talk with us.  We had a good relationship with them, and it was surprising to us.  We decided to reach out to a high-quality broker Pat Duffy of Colliers Arnold, who we knew and who represented a competitor.  We negotiated a new deal at $12 a square foot plus triple nets.  A home run for us and for the new tire company. It was an outstanding location and highly visible on a well-traveled road.  We put Firestone on notice to move out and broom sweep the premises according to the 1964 lease.

Results

We were pleased until we received a certified letter from Firestone making reference to a section of the lease located on page 19.  It stated that Firestone had the right to match any deal that was legitimate.  When we pulled the lease out of the file to review, it immediately became clear that page 19 was somehow missing, which meant we didn’t see this clause. We spoke with our attorney who advised us to honor the clause, but it was to be clear to Firestone that we would not change a word or term. They accepted. In the meantime, we broke the news to Pat Duffy, and as a professional, he knew we messed up and that would be that. He informed the new company. Because of the way we do business and our focus on our reputation, we decided to pay Pat the full commission on the transaction. We were not obliged to do that, but our good name and reputation was more important than the money.  Today, Pat is the President of Colliers in Houston and a nationally-recognized broker.  The takeaway is check your leases and be sure “page 19” isn’t missing! Always protect your good name and do the right thing. Firestone is still there paying the higher rent.