MDNews - Minnesota

++++++++++++++++ + + ++++++++++++++++ LEGALESE  +++ +++ The Phantom Language of a Tenant’s Lease by Kate Hebel, Principal of “new edition” even then, when it comes time to sign that document, do you hesitate just a second and wonder if you got the best deal? “new edition” has been working with M clinic administrators, real estate brokers and attorneys for the past several years deciphering the fi nancial implications of that legal jargon. When Kate Hebel, Principal of “new edition” reviews a tenant lease, she’s not checking real estate or legal terms; she’s searching for words and terms placing financial responsibility on the tenant throughout the term of the lease. She’s a translator of sorts, interpreting the OST PHYSICIAN GROUPS rely on their real estate bro- ker or attorney to negotiate and review their lease, but somewhat obscure language into English. She explains “leases often contain ambiguous and vague language and that text can often have fi nancial implications for the Clinic, anything from responsibil- ity for maintenance, compliance with building standards and even directives about extended hours; these costs can be signifi cant. I want to fully disclose what out-of-pocket costs could possibly be their responsibility in the future.” The clinic has an attorney to represent their legal interest and a broker to negoti- ate the real estate part of the transaction, but “new edition” actually assigns dollar value to the Tenant’s Responsibility sections scattered throughout the docu- ment. By incorporating her background of fi nance, design and construction, Ms. Hebel has made a unique niche for “new edition”. For the last thirty years she has been exclusive to the healthcare sector. As healthcare has changed so has “new edition”; in addition to consulting they also offer design and construction of tenant improvements. Because of her experience and expertise with construc- tion costs and establishing budgets, Ms. Hebel is able to provide a different perspective in reviewing a tenant’s lease. With a clear understanding of the The terminology is often quite typical and boilerplate, but it’s the phrasing that determines if the fi nancial responsibility is the landlord’s or yours! 6 | Twin Cities MD NEWS  MDNEWS.COM difference between capital expenditures and tenant improvements “new edition” can pinpoint language that is suspect and could cause unnecessary costs for the clinic. Her goal is to minimize the Clinic’s exposure to unforeseen costs. “Throughout the term of the lease, tenant improvements aren’t the only expenses. I enjoy ferreting out and disclosing costs associated with mechanical and electri- cal, often costs assigned to the Lessee. Dependent upon the building systems these costs could be inordinate and wouldn’t be discovered until replacement is necessary.” She recalled one occasion when some ordinary lease language could have been costly to the Clinic if approved: “during the review of the fi rst draft the phrase “building standards” was referenced. The language seemed innocent enough; however, when I requested a detailed listing of those building standards I real- ized the Landlord had wrapped building upgrades into the tenant improvements package. I knew the work would be costly in that building, due to existing condi- tions. Upon investigation and evaluation, the relative costs of those upgrades were approximately $80,000! We requested the broker negotiate a larger allowance to cover the costs.” Ms. Hebel points out that her work complements that of the attorney and broker. “At times, when requested, I’ll assemble a team to include a healthcare real estate broker and attorney; we work together throughout the negotiations in an effort to provide the best value and deal for the Clinic. Most healthcare leases are 10-15 years; it’s a long term commitment, and I believe by such a thorough review we provide a real value.” For more information about new edition, please visit www.newedition-inc.com or call 651-690-3441. n

• Cover