Just Ask ‘Em All!

Two men who had been business partners in the ladies garment business in New York decided to sell off their business and retire.

As they got ready to go their separate ways, Sol asked Abe:

“Well, Abie, what are you going to do with yourself
now that you’re retired ?”

Abe replied:

“Do you remember when we were in WWII we were stationed in San Antonio …

Well, I’m gonna sit in Travis Park in front of the St. Anthony Hotel

and just sit on a bench and feed the pigeons every day

and just “blow the cobwebs out of my mind” …

and you, Tsolly, what are you going to do ?”

to which Sol responded:

“I’m going to chase girls.”

Abe said:

“But Tsolly, your’re 65 years old, how you gonna chase girls ?”

and Sol answered:

“Look, Abie, Every day and every night for 35 years you and I were in that plant making ladies garments …

I never had time to even think about chasing girls …

now I have time, and I’m gonna chase ’em.”

So they split up and moved to San Antonio and each day Abie sat in the park and fed the pigeons,

and each day as the noon chimes rang out on the Church across the street,

Abe saw his former partner come out of one of the nearby office buildings

each day with a different woman … and head for the St. Anthony Hotel for a shack job.

One day it would be a gorgeous brunette,

the next day a stunning redhead,

the next day, a ravishing blonde.

After watching this for months, Sol’s curiosity finally got the best of him and he went to his former partner and said:

“Abie, how do you do it? You’re 65 years old and every day I see you take another beautiful young woman to the hotel for a shack job.”

Abie replied:

“Tsolly, I just ask them all.”

Sol said:

“What do you mean you ‘just ask ’em all’ ?”

Abie replied:

“I just ask every young woman I meet if they want to go to bed with me.”

Sol answered:

“But Tsolly, … don’t you get your face slapped a lot ?”

To which Sol answered:

“Sure I get my face slapped a lot,

but I get a lot of dates.”

Robert Jorrie

“I would rather be ashes than dust!

I would rather that my spark burn out in a brilliant blaze than it should be stifled by dry rot.

I would rather be a superb meteor, every atom of me in magnificent glow, than a sleepy and permanent planet.

The proper function of Man is to Live, not to exist.

I shall not waste my days in trying to prolong them. I shall use my Time.”

Jack London
(1876-1916)

Far Better it is to Dare Mighty Things,

to Win Glorious Triumphs,

even though Checkered with Failure,

Than to take Ranks with those Poor Spirits

who neither Enjoy much nor Suffer much,

Because they live in the grey Twilight

that knows not Victory nor Defeat.

Theodore Roosevelt

“Courage begins with Honesty.

To be Courageous you Must:

Not sacrifice yourself, and

See things as they Really are.”

Lucille Malcolm Orr,
RJ’s piano teacher

The Limits of my Language
Means the Limits of my World.

Ludwig Wittgenstein

When the use of Language results in the creation of Disagreement and Conflict,

there is Something Wrong

with the Speaker, or the Listener,

or Both.

Florence Jorrie Marx

Work Today, for you know not how much you may be hindered Tomorrow.

Ben Franklin

exists only in Turmoil & Disarray.

Distress, Unbusinesslike Discord,

Bad Manners, and Team Disintegration.

instead of into relations between Leader and Followers

and is destructive, not beneficial to the Company.

& unnecessarily “Converts” what would have been Profits into the payment of “expenses” … merely to satisfy the Egos of Un-Enlightened Primadonnas.

because it isn’t pre-prepared to accept them …

either in its physical plant/staff preparedness

or in the “mind set” of its Management …

and when forced to decide,

Management believes that it can’t afford to take them,
and just passes Opportunity by.

PREPARE!

Robert Jorrie,
1993

WHY WE INSIST UPON ANNUAL INCREASES IN RENTS

1. MINIMIZES DESTRUCTIVE TENANT “STICKER SHOCK” AT RENEWAL TIME If the Landlord does not increase the rents annually, then the rents the Landlord receives monthly at the end of the lease will be SUBSTANTIALLY BELOW the then Fair Market Value Rental Value of that building

and thus, when you quote a renewal rental somewhat closer to FMV to the Existing Tenant …

the tenant will get “Sticker Shock” and will often move … even if he has to pay even higher rents for equivalent space.

In other words … the Landlord’s simply acquiescing to a request for “fixed rents”, Gravely Risks Committing the Greatest Sin of All … “Running Off” your own Precious Tenant!

Whereas if the “gap” between what the tenant is actually paying monthly at the end of the lease is then “somewhat closer” to the FMV rent quoted for the new lease term … that Risk of Tenant Loss is Significantly Diminished.

The cases where I learned these Bitter Personal Lessons:

Texas Freight Forwarders – 1524
Purse and Company – 1524
Sol Schwartz -Suite 800

2. MINIMIZATION OF EROSION Annual Rent Increases, when properly set out in the lease, keeps the Landlord somewhat “closer” to preserving the Purchasing Power of his Rent in those later years when those rents are collected … and which Purchasing Power is always being CONTINUOUSLY ERODED BY INFLATION under Fixed Rent situations.

3. SHOULD ANNUAL RENT INCREASES BE EFFECTED BY CPI OR BY “STAIR STEPS” Theoretically using the Consumer Price Index, (CPI) to keep the Erosion of Purchasing Power ought to be Ideal … but many things can interfere with that:

3.1. There are several different CPI’s and some of the ones created do not closely relate to economic factors in our locale.

3.2. The US Government has re-defined the CPI several times … which always leads leases already containing CPI Clauses under the old definitions into controversy that if not resolved, leads to time and money wasting lawsuits.

3.3. The CPI figures are published at intervals that sometimes change at unpredictable times and thus don’t change at the right time to adjust the rents timely contemplated when the lease was written years before. Once President Carter caused the CPI Publication Date to be “moved” and moving that date meant that the CPI in existence on the lease “rent increase date” was the old one CPI instead of the newer one intended and that cost me a lot of lost money.

3.4. Sometimes the change in the CPI does not relate to the business we are in … for example, when durable goods manufacturing is doing well and residential real estate is doing well but commercial real estate is not doing well.

3.5. Lots of lawyers do not know how to properly craft a CPI clause.

3.6. CPI clauses always create time wasting controversy when it is time to raise the rent. This controversy not only wastes the landlords and tenants time … but it often results in lingering bad feelings that are destructive to renewal effort at renewal time.

3.7. Stair Step Rent increases are very easy to define and if they are clearly written in the lease, no one argues with them when the rent goes up. The “key” is whether the landlord is clever enough to make his stair step increases stay even with his intended plan.

4. LENGTH OF LEASE TERMS There is nothing “magical” about using round numbers of whole years in lease terms.

For years, I thought about standard “3 year” and “5 year” and “10 year” leases. Recently I have discovered that this is ONLY IN MY MIND … often tenants have no objection whatever to a lease of “7 years and 4 months” … or “60 months, less 2 days”

4.1 Great Reasons for NOT using “Round Number of Whole Years” leases

4.1.1 Lease Marketing should be a constant and consistent effort and where possible, should be structured so that it takes into account, realistic factors happening in the market place.
4.1.2 Examples: In retail leasing, there is NO marketing activity IN THE RETAIL MARKET in this locale from October 1st until the first week in January because the potential retail tenants are focused on tending to their Christmas business and upon nothing else …

So why should a smart landlord ever permit a lease term to end during that period? … when your broker can’t even get new potential tenants attention during that time of year and the space thus, sits vacant until after the first of the year.

My Solution

In my operation, I make all RETAIL lease terms end on February 28th so that right after the first of the year, my broker can “warm up” and begin marketing it. This gives my marketing people the Optimum and Maximum Time to market my space … 9 full months (until October 1st) to lease it up.

And the tenant still knows he has about 9 weeks after Christmas to either move out or renew.

And this works well as long as that individual property has few enough tenants so that not too many spaces come vacant at the same time.

4.1.3 When a large non-retail commercial property lease term is going to end with a term that the parties want to end at about year end, in my operation I always make the lease term end 2 days before Year End so it will be “vacant” on December 31st … the day upon which the Bexar Appraisal District is required by State Law to value it for Property Tax Purposes.

It is far better for my Property Taxes to have it “vacant” ON THAT DAY, than to have it be considered “leased” for tax purposes under the law on that day … and then go “vacant” the next day because I stupidly permitted a 31 day month to be used as the last month of the lease term.

4.1.4 It is far better for landlord to plan out the lease expirations at lease negotiation time by using non “round number” leases so that you do not have too much space on the market at one time … this not only hurts the landlords cash flow …

but in addition to the loss of cash flow, it can be a “Double Whammy” when 2 or more spaces of similar product come on the market at the same time … for then you also compete with yourself!

Robert Jorrie

I am the basis of all Wealth,
the Heritage of the Wise, the Thrifty and Prudent.

I am the Poor Man’s Joy and Comfort,
the Rich Man’s Prize,
the Right Hand of Capital,
the Silent Partner of many Thousands of Successful Men.

I am the Solace of the Widow,
the Comfort of Old Age,
the Cornerstone of Security against Misfortune and Want.

I am handed down to children, through generations,
as a Thing of Greatest Worth.

I am the Choicest Fruit of Toil.
Credit Respects Me.
Yet I am Humble.

I stand before every man bidding him,
Know Me For What I Am and Possess Me.

I grow and increase in value through Countless Days.

Though I seem Dormant,
my Worth Increases,
Never Failing, Never Ceasing,
Time is my aid and population heaps up my gain.

Fire and the Elements I defy,
for they cannot destroy me.

My possessors learn to believe in me;
invariably they become Envied.

While all things Wither And Decay, I survive.
The centuries find me Younger,
increasing in strength.

The Thriftless speak ill of me.
The charlatans of finance attack me.

I am Trustworthy.
I am Sound.
Unfailingly, I triumph and detractors are disproved.

Minerals and Oils come from me.
I am Producer of Food,
the basis for Ships and Factories,
the Foundation of Banks.

Yet I am so common that thousands,
unthinking and unknowingly,
pass me by.

I am Real Estate.

Author Unknown, but if you know the source, please tell Bobby