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Case Study

Market knowledge and negotiation skills yield $4.6 million in savings

A global financial institution was early to forecast that a slower economy could not support its nearly 1,400 consumer mortgage lending branches in the United States. Therefore, the global firm approached Jones Lang LaSalle, its transaction partner since 2006, to begin a process for disposing of locations in the United States.

To begin the process, Jones Lang LaSalle helped the company evaluate its branches. Initially, we calculated the remaining cost of each lease, determined by termination options and expiration dates. Jones Lang LaSalle’s Property Dashboard Tool also made the evaluation process much easier. This tool is both a mapping tool that pulls data from our portfolio tracker and lease administration database. It contains detailed information about each branch—closing costs, floor-plan, layout and location—all in one place. The map function showed all branches in a selected geographic location, so the company could see particular branches that were in close proximity to each other. With qualitative and quantitative branch information at their fingertips, CRE executives could evaluate branches from a profitability perspective and determine which locations could potentially be closed.

Jones Lang LaSalle then approached landlords to negotiate lease buy-outs. Negotiation skills and in-depth market knowledge were on our side, so Jones Lang LaSalle determined lump-sum payments to offer the landlords in exchange for early termination. These lump-sum payments were typically discounted values of what was owed on the lease. Because they could potentially re-lease the space, and capture “double-rent,” landlords often found these lump sums attractive. Jones Lang LaSalle leveraged termination options and market insight when negotiating with landlords.

In less than two years, the financial institution has disposed of 548 branches and saved more than $4.6 million dollars, when compared against its original lease obligations.

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