• The SNDA Triangle -- Protecting Landlords, Tenants, and Lenders
  • July 30, 2003 | Author: William V. Strauss
  • Law Firm: Strauss & Troy A Legal Professional Association - Cincinnati Office
  • Profitt Development Company owns an outlet mall on the outskirts of Cincinnati. Its main tenant is Athletic Elite ("Athletic"), a large and profitable discount sporting goods store. The rental stream that Athletic provides to Profitt totals more than any of the mall's other tenants (mostly small specialty shops). Profitt now needs to consolidate and pay off some large debts that are coming due at once. It wants to obtain the necessary funds by taking out a second mortgage on the mall property from BancUSA of Ohio. But BancUSA will only approve the loan if Athletic enters into a subordination agreement with BancUSA stating that its lease will be inferior to the bank's mortgage in the event the bank ever has to foreclose on the property.