Intranexus leased approximately 10,000 square feet at 2201 Broadway in Oakland, California. Intranexus desired to reduce its real estate expenses for fear of insolvency. The market was inundated with sublease space and the demand for space was nonexistent.
Equistone Partners commenced an evaluation of Intranexus’ financial statements, the provisions of the lease, and a pro-forma analysis of the scheduled lease payments and potential disposition outcomes. Our review indicated that Intranexus was in the “zone of insolvency” and that immediate relief was crucial. We presented Intranexus’ case to the landlord and ultimately negotiated an agreement that provided for the reduction of Intranexus’ premises to 1,500 square feet located in another space in the building as well as a decrease in the monthly rent by 60% in exchange for forfeiture of their security deposit (1 month’s rent). Intranexus incurred moving costs of $30,000 and the construction costs of a new server room.
The restructure of Intranexus’ lease resulted in a reduction of the scheduled lease payments by approximately $700,000.