Lease Restructuring

Andrew Margolick, Founder of ARM Consulting, LLC started his real estate career in 2000 by acting as of one the lead negotiators on McDonald’s purchase of Boston Market in bankruptcy. He and his partners have been restructuring leases ever since that time, saving clients over $375 million. A common misconception amongst tenants is the belief that they must be in bankruptcy in order to be able to restructure leases. ARM Consulting has an expert understanding of how to assess and maximize leverage, allowing for the restructuring of leases in many different situations.

ARM Consulting always provides clients with a realistic assessment of their portfolio, offering to work on only those locations that are candidates to be restructured, rather than taking a scorched earth, portfolio-wide approach. The company’s deep landlord relationships and mutual respect create an immediate understanding that any request is not a “fishing expedition” or a frivolous one. ARM Consulting prides itself on NEVER tarnishing a client’s relationships with their landlords; in fact, relationships are enhanced by ARM Consulting’s involvement with clients. The company has restructured thousands of leases both inside and outside of bankruptcy, creating the following:

Lease Restructuring Yields $14 Million difference in sales priceHot Dog on a Stick Logo

Benefits

  • Reduced occupancy costs
  • Increased profitability
  • Increased valuations
  • Sustainable and manageable leasehold obligations

Examples

  • Anchor Blue- $79 million of leasehold savings in bankruptcy
  • Bally Total Fitness- pre-packaged bankruptcy
  • Radio Shack
  • Real Mex
  • Mikasa- termination of leasehold portfolio outside of bankruptcy
  • Select Comfort- restructuring of leasehold portfolio. Stock rose from $.30 to $30 following restructuring

Andrew was responsible for leases of a retail client in bankruptcy for which I was Financial Advisor. Not only did he arrange cost effective exit from rejected leases, he successfully renegotiated dramatic cost reductions of many of the surviving stores. His work was impressive. These new leases got a higher sale price for the company and effectively allowed the company to emerge from bankruptcy and return to profitability.

Kern GillettePrincipal, Scouler & Co.