Andy Cohen, an HF&G shareholder, recently served as a select member of the Conference Faculty for the 2017 Bernard O. Dow Leasing Institute, a program of the University of Texas School of Law Continuing Legal Education. Mr. Cohen presented Utilizing Letters of Credit as Security for Lease Transactions to participants.
Texas attorneys in attendance learned “the use of letters of credit to secure tenant performance is increasingly common.” According to Mr. Cohen, “absent investment grade credit tenants, it is typical for landlords to seek security to ensure repayment of these investments.”
“The use of letters of credit as a form of security for lease obligations in lieu of the more traditional cash security deposits has grown,” adds Mr. Cohen. “The reality in the marketplace is that not every prospective Tenant has enough liquid capital on hand or a sufficiently creditworthy and willing affiliate to act as guarantor.”