Diving into Twitter's lease default...
Last fall, Elon proved that "specific performance" is enforceable, and now we have another document test thanks to Twitter (defendant) and Columbia Property Trust (plaintiff).
A few quick takeaways...
CROSSINSTALL SIGNED A LEASE IN 2017 (per original lease):
This Office Lease (the "Lease"), dated as of the date set forth in Section 1 of the Summary of Basic Lease Information (the "Summary"), below, is made by and between COLUMBIA REIT - 650 CALIFORNIA, LLC, a Delaware limited liability company ("Landlord"), and CROSSINSTALL, INC., a Delaware corporation ("Tenant"). [The lease for nearly 16K SF expires in 2025, and Twitter acquired Crossinstall in 2020.]
TWITTER THEN SUBLEASED SPACE (per sublease):
THIS SUBLEASE (“Sublease”) is entered into as of October 5, 2022 (the “Effective Date”), by and between TWITTER, INC., a Delaware corporation (“Sublandlord”) and DENTSU INTERNATIONAL AMERICAS LLC, a Delaware limited liability company (“Subtenant”)...
TWITTER IS ON THE HOOK FOR LEASE OBLIGATIONS (per sublease):
Subtenant will indemnify, defend, and protect and hold Sublandlord harmless from and against any actual loss, cost, damage or liability (including attorneys’ fees) arising out of, by reason of, or resulting from, third party claims, Subtenant’s failure to perform or observe any of the terms and conditions of the Master Lease that are incorporated into this Sublease, or the terms and conditions of this Sublease that are the subject matter of any indemnity or hold harmless of Sublandlord to Landlord under the Master Lease.
TWITTER FAILED TO PAY RENT (per default notice):
Notice is hereby given that Tenant has failed to pay Rent in the amount of $136,260 when due under the Master Lease (the "Past Due Amount").
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Subleasing and assignment are some of the most complicated provisions in leases, but what do you think? Will Twitter be on the hook?
Why this matters to CRE Analyst: There are four primary types of transactions in commercial real estate (leases, sales, loans, JVs), and each transaction is memorialized in a document. We think it's very important to understand the key provisions of each document, so we dive into transaction documents in our classes.
Documents like the Twitter/Columbia lease (and the related conflict), provide real-world puzzles for our students to solve, which develops skills and makes class interesting.
You can view the full lawsuit here.
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