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“High-Tech Companies Absorbing Space, But Will It Be Short Term?”
Los Angeles Times--National Edition (11/30/99) P. C1/2 (Howard, Bob)

Southern California's commercial real estate market is being transformed by the myriad of fast-growing technology firms looking to lease large blocks of space. These so-called “dot-com” businesses often rent several hundred thousand feet of office and industrial space at a time, creating a business climate not seen for a decade. While landlords eagerly welcome the rush of new tenants, analysts worry that the boom will not last. Because of the nature of their business, high-tech companies often must expand quite rapidly into larger facilities. As a result, they need assurances that the landlord will be able to provide the space or will release them from long-term obligations. In exchange for taking the higher risk of leasing to start-up dot-com companies, landlords often require these tenants to post letters of credit or lease bonds. Cushman Realty Corp. broker Vince Pellerito remarks, “Entertainment has slowed down, but the dot-com companies, the companies that serve them, and other types of companies have made up for it. Credit-worthiness is the No. 1 concern of landlords with these companies, but the landlords are being more open-minded than they might have been in the past.” One growing trend is for the landlord to share in the risk and rewards with Internet firms by accepting an equity share in the tenant's business in lieu of a letter of credit or a lease bond.

Hmmm, so how do the REIT's pass through the equity sharing kicker?

My two cents, 11
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