Weitz Commercial - 105 Central Way; Ste 202 - Kirkland, WA - (206) 306-4034

Thursday, January 20, 2022

Washington Syndication Agreements - The Basics


The Basics of Commercial Real Estate Syndication: 

Many investors don't have access to the purchase of commercial building either for financial reasons (typically a larger down payment will be required) or they simply don't want to manage a property, syndication have become a popular tool especially in the small to mid-size commercial market. 

In doing so, it useful also for the founders/ investors to understand the syndication agreement and how a syndicate works in a Washington State Syndication Group.  

In this article, we examine the typical elements of a syndication agreement an investor can expect to see and should review/ negotiate. 

Purpose of the Agreement

Whereas the term sheet and shareholders’ agreement governs the relationship between the founders and the investors, a syndication agreement sets out the roles and responsibilities of the investors towards each other. 

The syndication agreement has two main purposes: 

1) it is aimed to facilitate the investment process by defining the roles of investors, their objectives, investments and the framework for the negotiations.  

2) the syndication agreement sets out the guidelines for the post-investment activities of the investors.

A syndication agreement typically consists of two parts: One governing the acts of the syndicate while contemplating an investment and another governing the acts of the syndicate after the investment.

Preparing the Investment

The key pre-deal parts set out the role of the parties. These typically include who is the deal lead and how are the syndicate investors. Some of the syndicate members may also be appointed as co-leads or subject matter experts who assist the lead investor as agreed.

The lead investor has the authority to negotiate the deal on behalf of the syndicate. The underlying conditions for the authorization can be outlined in the agreement. 

Besides negotiating the term sheet, the lead investor is typically responsible for representing the syndicate when preparing the shareholders’ agreement and the investment agreement.

The Role of the Lead Investor

The lead investor leads the negotiations on behalf of the syndicate. Other team syndicate members may support the lead in the negotiations, especially if certain subject matter know-how is required.

The preparation of the investment documents is typically also the responsibility of the lead. If this activity is outsourced to e.g. an outside law firm, the deal lead is still responsible for coordinating the work of the law firm on behalf of the syndicate.

Use of Experts

Every now and then the syndicate needs external expertise. Most commonly this is legal assistance relating to the shareholders’ agreement and investment documents but can include other services as well such contractor, accounting, and other professional relationships.

The experts may be chosen by the lead investor, who is then responsible for the coordination of their work. In cost compensation, different rules may apply if the investment is closed and if it falls apart (e.g. the company may cover the costs within pre-determined budget if the investment is made, but the investors cover the costs pro rata with their planned tickets if the syndicate decides not to invest).

Remuneration to the Lead Investor

If there is compensation for the lead investors, it should be agreed upon in the syndication agreement. And even if there is no compensation, it would also make sense to write that down in the agreement.

The remuneration for the lead investor can be e.g. lead investor fee, lead investor carry or compensation for the advisory or board work.

After the Investment

The second purpose of the syndication agreement is to set a foundation on the acts of the parties after the investment is made.

Voting in Shareholders’ Meetings

One of the benefits of making the syndicate formal via a syndication agreement is that it makes the syndicate one major shareholder instead of a bunch of smaller shareholders. Therefore, to fully gain the benefits of such arrangements, the syndicate members need to act unanimously.

Unanimous acting can be achieved by setting up a procedure in the operating agreement, where the syndicate members form their common understanding before a material decision is made and act accordingly in the actual decision making. E.g. it may be stipulated that all in all decisions that would require a qualified majority under the shareholders’ agreement, the syndicate members act as one if two-thirds of the shares held by the syndicate so vote.


A sound syndicate agreement helps to create a syndicate that is stronger than the sum of its parts. It also helps to mitigate the issues of the long cap table, when despite the number of investors they all act as one. Thus, having a syndication agreement in place can often be in the interest of both the investors as well as the founders; especially if the syndicate is large.

For more information on joining a King County Real Estate Syndication or Snohomish County Syndication, consider contacting a Puget Sound Commercial Real Estate Brokerage

Our Firm: 

Weitz Commercial Real Estate & Investing

Kirkland                                                                        Snohomish

105 Central Way, Ste 205                                             108 Union Ave

Kirkland, WA 98033                                                    Snohomish, WA 98290

...or email me, Scott Weitz at Scott@Weitzcommercial.com or text / call (206) 306-4034

Tuesday, January 18, 2022

Negotiating Tenant Improvements - King and Snohomish County Commercial Real Estate


The Basics - Tenant Improvement 

A tenant improvement allowance (TIA) is the amount of money the landlord or property manager is willing to spend so a tenant can renovate their new space according to their demands. Typically speaking, the improvements are aesthetic or functional, including paint, lighting fixtures, flooring, and similar items. Depending on the wording of the lease, tenant improvement allowances come in two general types – an allowance type and turnkey.



With an allowance improvement, a designated amount is allocated towards making tenant improvements with expenses being paid directly by the landlord to the contractors for making physical improvements to the space. This type of TIA does not cover furniture, technology, or customized items but only things specified and mutually agreed-upon by the landlord and tenant.

It should be noted that allowance typically does not permit the tenant to make any improvements of their choosing, but is rather relegated to those items specified in the agreement with the landlord. 

The allowance is typically offered per square foot of space so, while negotiating the TIA. Its incredibly important that a tenant must be a certain/ confident that the designated amount is sufficient to accomplish their needs. Particularly, we like to team with some of the best local contractors to give a good sense of TIs that will be necessary to accomplish the tenant build out needs. We highly recommend doing this PRIOR to finalizing your lease. 

Potential Drawback: 

From a tenant's perspective, a potential biggest drawback of a traditional allowance is the responsibility of finding the architects, contractors, and sometimes even project manager to work on the improvements. Particularly, for a small business or startup, such a responsibility can absorb significant amounts of time that should be spent growing the business.  


For a tenant, a turnkey TIA is most entirely about the finished product. The landlord manages the entire process with the tenant approving the layout, fixtures, color palette, flooring, and most other aesthetic choices along with the finished product. The landlord is responsible for covering the expenses throughout the process.

Typically, a tenant is assigned a specified amount per square foot of space. Therefore, it is important to make sure the designated budget can successfully accomplish all of the changes and renovations desired. Any alterations that might be requested by the tenant after the agreement is signed but before the improvements are completed could trigger additional costs for the tenant.

Ultimately, a turnkey buildout is mutually agreeable for both a tenant and landlord if the costs are clearly spelled out. For them to work effectively for both parties, however, the plans should be straightforward, understandable, and financially reasonable relative to the total cost and the length of the lease. Larger, more complicated projects aren’t favored by landlords due to potential complications and slimming margins if the project spirals out of control.


Factors That Can Influence the Allowance

For reasons that would seem fairly obvious, TIAs more financially attractive / palatable for landlords in a longer term lease where the Landlord in confident in a long term tenancy. Typically speaking, a minimum three-year lease is needed for a TIA but, if more substantial improvements like moved walls are requested, the required minimum lease duration will usually be five years or more. 

Additionally, landlords prefer their TIA costs go towards improvements that will ultimately improve the value of the space over time. HVAC, plumbing, and lighting improvements are examples of items that are unlikely to be replaced or updated when the next lessee moves in. In other words, more aesthetic improvements like carpet, paint, and drywall are more likely to be approved than costs “above the ceiling" like HVAC plumbing and lighting.

For more information on finding the a great King or Snohomish County Commercial space for your business, consider contact a Snohomish County Commercial Real Estate Broker

Our office

Scott Weitz

Weitz Commercial

108 Union Ave, 

Snohomish, WA 98290


T: (206) 306-4034

Tuesday, June 22, 2021

Seattle extends eviction moratorium

 June 18th, 2021

We are now well over a year after the beginning of COVID and the accompanying governmental interventions to protect us from ourselves. Seattle Mayor Jenny Durkan has just introduced a new executive order extending the moratorium through September of 2021. Here we will examine some of the nuances of the order and also provide some insight on how this could effect the commercial real estate market moving forward. 

To be clear, the entire moratorium is premised on one sentence...."Whereas, the continued number of cases and deaths in Seattle and King County shows that this pandemic continues to threaten the life and health of people as well as the economy of the City of Seattle: Now therefore.......

When issuing an executive order that so adversely effects a basic tenant of American law "property rights", one would think the Mayor would actually provide data or stats to back up this assertion. At this stage of the pandemic, all adults in the region have the opportunity to get one of several vaccination options. If they have not done so, that is their choice and this author would respect that decision. Accordingly, the health concerns of this pandemic are OVER. Simple as that. Get vaccinated or assume the risk. How long can this government intervention of basic civil rights charade continue? 

Some of the basic terms of the Moratorium: 

1) Emergency order imposing a moratorium on small business and non-profits....is hereby extended to September 30, 3021. 

2) The Emergency Moratorium on residential evictions is extended through September 30, 2021 at which point Ordinance 126075 which provides a defense against evictions due to hardship from COVID-19 for 6 months goes into effect. 

3) Seattle City Light and Seattle Public Utilities will issue a directive to maintain flexible payment plan policies to December 31, 2021. 

4) Booting of vehicles with unpaid parking tickets will remain suspended. 

What does it mean? 

Well, depending on the side of the fence you are on (Landlord vs. Tenant), it means very different things. While some Tenants will assuredly applaud the extension, Landlords, who have been given no relief from the Federal Paycheck Protection Program, continue to take the brunt of the losses here. Their mortgage and tax obligations continue while they have no immediate recourse for tenants who are unable or refuse to pay rent. 

Is this good policy given the circumstances? Frankly, time will tell. What can be unequivocally ascertained is that we do not have a 'market system' at the moment. Most of the prices we see from purchases to rentals, to commodities have been driven by governmental policies rather than supply and demand. That has led and will lead to market skewing, bubbles and inevitable corrections down the road.....those typically don't end well. 

For more information on Seattle Commercial Real Estate brokerage or legal issues, find us at www.WeitzCommercial.com or Scott@WeitzCommercial.com. 

Contact Us: 

Weitz Commercial

105 Central Way, Ste 202

Kirkland, WA 98033


Tuesday, October 20, 2020

Kirkland / Washington Commercial Lease Negotiation

Winston Churchill once said  "With great challenge comes great opportunity". While the COVID-19 has created challenges for many small businesses, the market for commercial space has (and we predict will continue) change and evolve. Commercial tenants with upcoming expiring leases have an opportunity to lock-in extremely favorable lease agreements. As landlords are facing historic vacancies and continuing uncertainties, they will want to ensure that their properties have tenants. To do so, landlords may consider providing incentives to tenants that they would never have considered one year ago.

Among other concessions, data suggests that commercial landlords across the United States are offering more free rent. On average, landlords are offering 5% free rent of the total lease term for recently executed leases. This is an increase of about 30% compared to this quarter last year (See: CompStak-Trepp-Final-National-Report).

Moreover, the average spread between Starting Rent and Net Effective Rent has increased by 27%. Starting Rent is defined as the amount a tenant pays prior to any concessions, whereas Net Effective Rent is defined as the amount a tenant actually pays after concessions are deducted. This increase in Starting Rent and Net Effective Rent resembles times similar to the Great Depression of 1929. For a commercial tenant with the financial capacity to renegotiate a lease, the opportunity to lock in a lease with plenty of concessions is ripe for the taking (See: CompStak-Trepp-Final-National-Report).

The bottom line is that if you are a commercial tenant in a position to extend your lease (either via an option or basic renewal), now may be the most optimal time to do so as leverage on the Tenant side hasn't been this good for many years. If you have further questions regarding negotiating Kirkland Commercial Estate, please consider contacting a Kirkland Commercial Real Estate Brokerage

Our information: 

Weitz Commercial 

150 Lake Street S; Ste 216

Kirkland, WA 98033


Wednesday, August 19, 2020

Washington Options for Lease negotiation for COVID.

Force Majeure

What is force majeure?

Unlike many countries, English common law provides no universal concept or definition of force majeure, which instead operates only to the extent contractually agreed. Accordingly, the ability of a party to invoke force majeure (and the effect this will have on the contract in question) will depend on the presence of a force majeure clause and its terms within your lease or contractual agreement.

Though each force majeure clause may vary and must be considered on its own terms, there are various common elements.


Typical elements of force majeure

The onus is on the party relying on the clause to demonstrate that it has been engaged in the particular factual circumstances.1

1.    Occurrence of event

First, the party suggesting force majeure will always need to establish that one of the prescribed events has occurred. Typically, such events include such as war, natural disaster or acts of god will be included. It is not uncommon for a pandemic or epidemic to be included as a qualifying event, which plainly would cover the outbreak of COVID-19. Clauses may also list a change in law or compliance with any government regulation or order. These triggers are particularly relevant in the current circumstances, where many governments are imposing unprecedented restrictions in response to COVID-19.

2.    Impact on performance

Once established that a trigger event has occurred, the party seeking to rely on the force majeure clause must also show that the event has impeded their ability to perform their obligations to the necessary degree.

Where there is a requirement for the event to have “prevented” performance, the defaulting party will need to demonstrate that it has become physically or legally impossible to perform, and not merely more difficult or unprofitable.

3.    Sole cause

As regards the necessary extent of the causal link between the force majeure event and a party’s inability to perform their contractual obligations, the defaulting party must demonstrate that the event is the sole and operative cause of the impediment.11

Causation is likely to be a heavily disputed factor. If a party was already facing issues that would impact their obligations, it may be difficult to prove that the force majeure event was the sole cause.

4.    Mitigation

Force majeure clauses will commonly require a party to mitigate the effects of the trigger event, for example by imposing a duty to use all reasonable endeavours to do so. What constitutes reasonable endeavours is fact-specific and will vary depending on the type of business and the surrounding circumstances.

5.    Contractual consequences

The consequences of a party validly calling force majeure will depend on the wording of the clause. The clause may entitle a party to suspend or extend time for performance, or allow for termination of the contract. It is common for a force majeure clause to allow suspension of obligations for a certain period of time, after which one or both of the parties have the option to terminate the contract.

In addition, force majeure clauses often include notice or other procedural requirements


What is frustration?

In the absence of a force majeure clause, contracting parties may consider relying on the common-law doctrine of frustration {of purpose}. Frustration discharges a contract where an event occurs that renders it physically or commercially impossible to perform, or transforms the obligation to perform into one radically different than envisaged at the time of contracting.

Elements of frustration

The test

Frustration applies only in extreme scenarios, and the threshold for establishing that a contract is frustrated is very high. Though there is no definitive test for frustration, generally a contract may be frustrated where:

·         the frustrating event occurs after the contract has been formed;

·         the event is beyond what was contemplated by the parties on entering the contract and is so fundamental that it strikes the root of the contract;

·         neither party is at fault; and

·         the event renders performance of the contract impossible, illegal or radically different from that contemplated by the parties at the time they entered into the contract.

For frustration to occur, it must be demonstrated that the event affects the main purpose of the contract.

All relevant factors, including the wider contract and factual circumstances, will be taken into account by the court when considering whether a frustrating event has occurred.

Events leading to Frustration

Types of events that have been to held to frustrate a contract include war, incapacity or death, cancellation of an event, a change in law, or destruction of subject matter.

COVID-19 could be considered a frustrating event, however, it will more likely be the consequences flowing from the COVID-19 outbreak that qualify (ie. Government Restrictions).


Frustration requires that the supervening event was unforeseeable. The courts will take into account all factors when considering the parties’ knowledge, expectations and assumptions regarding the risk that a particular event might occur at the time of contracting.16


Generally, to prove that a contract has been frustrated, performance of contractual obligations must be shown to be genuinely impossible. It is not enough that obligations have become extremely difficult, even if they would result in devastating hardship on a party. If any manner of performance remains an option, this must be taken, regardless of the burden it would inflict on the party.

Many of the effects and the measures introduced as result of COVID-19 will be temporary. Depending on the nature of the contract, it may therefore be difficult (though not impossible) to show that performance has become genuinely impossible and not merely temporarily delayed.

Consequences of frustration

Where frustration is successfully invoked, the contract is automatically terminated and all parties are released from their obligations. As the contract is terminated immediately, the parties are not restored to their pre-contractual position. This may result in an unfair or uncommercial outcome. If the Law Reform (Frustrated Contracts) Act 1942 does not apply, then money paid before the frustrating event is only recoverable where there has been total failure of consideration.17

The Act applies to commercial contracts, with the exception of contracts that have expressly excluded it. Certain shipping, insurance and perishable goods contracts also fall outside the scope of the Act.

Where the Act applies, money paid before the frustrating event can be recovered and unpaid sums that are due cease to be payable.

A party may also be able to retain an amount of the money paid to cover incurred expenses. Additionally, the court may require a party to pay a just sum for a valuable benefit received under the contract.

Relationship with force majeure

Where a contract contains a force majeure clause, it is unlikely the parties will be able to argue frustration. This is because the parties will be viewed as having already made express provision for the consequences of a particular supervening event in the contract itself.

However, because force majeure clauses are viewed in a restrictive way, the courts will need to be satisfied that the wording of the force majeure clause covering the event is “full and complete” before concluding that frustration is not applicable.


If your business has been effected by COVID regulations, you may have options to postpone/ stop your lease obligations, consider contacting a Snohomish County Commercial Real Estate Company

Weitz Commercial

Main Office: 

105 Central Way; Ste 205

Kirkland, WA 98033

Snohomish County: 

108 Union Ave

Snohomish, WA 98290


T: (206) 306-4034