LAPA Conference Managing the Fundamental Terms of Leases Michael Wood Mike Dennehy 9 October 2008

Why? What is the purpose of management: To be effective, efficient and, where appropriate, profitable This will depend upon a number of factors –Type of property Commercial Social Community –Legal constraints eg LGA 2002, Public Works Act, Reserves Act –Council policies and objectives Rent policies reasons for holding particular properties eg for future public works

Purpose of Management Also…..avoid disaster! Being unable to require removal of tenant’s fit out Inadequate insurance Inappropriate change of use depressing rents

What are the key lease terms to be managed? Critical dates - rent reviews, lease renewals, expiry dates, redecoration Landlord and Tenant maintenance obligations Rent and Operating Expenses

Key lease terms continued Assignments and Sub Leases Use and changes of use Lease expiry obligations - make good

How are these managed? Proper understanding of the lease and the associated legal implications Well informed and effective lease negotiations

How are these managed? continued An understanding of the market and best practice Taking a strategic approach and understanding the wider implications Effective relationship management

Legal considerations Knowing how the law affects the operation of the lease –consider the main areas where the law is important – what you need to know in negotiating leases –insurance and liability for damage –landlord’s consent eg to assignment, change of use, signs, alterations –removal of tenant’s fixtures at the end of the lease PLA provisions in each of the above cases

Legal considerations continued Developing an in-house lease or series of leases –could be a set of clauses modifying the Auckland District Law Society lease –gives structure to lease negotiations –is more efficient in setting up leases and ensuring consistency and predictability –must be up to date in terms of law or practice A good database e.g. Vision Software

Benefits of a good database Critical date diary to mitigate risk Protect your properties Preserve asset values Reporting

Benefits continued Planning Promptly identify issues and opportunities Power to the property team

Case Study - Wellington City Council Public consultation including submissions Recreation leases including recording compliance details of recreation leases, one off events and outgoings responsibilities Property acquisitions – legislation, price, public consultations Property disposals – agreements, legislation, marketing, offers back, public consultation, responses

Case Study - Wellington City Council continued Expressions of Interest Heritage/Cultural Reserve land

Q & A Contact Details Michael Wood Partner Simpson Grierson Level 27, 88 Shortland Street, Private Bag 92518, Auckland, New Zealand DDI | Fax | Mobile | Mike Dennehy CEO Vision Software Level 1, 201 Maunganui Road, PO Box 5287, Mt Maunganui, New Zealand PH Ext 714 | Fax | Mobile |