Evaluating Commercial Tenant Offers in Alberta

1. Normalize the financial terms

Convert every proposal to the same area, time period and term. Schedule base rent, escalations, additional-rent treatment, percentage rent if any, free rent, fixturing, improvement contributions and landlord work by lease year.

Separate gross revenue from net cash consequences. Include commissions, downtime, professional costs, unrecovered operating costs, capital spending and the timing of payments rather than comparing only the starting rate.

• Term and commencement
• Base-rent schedule
• Recoveries and exclusions
• Free rent and fixturing
• Improvement contributions
• Landlord capital and transaction costs

2. Understand the proposed tenant

Identify the legal entity that will sign, the people controlling the decision, the operating history and whether the premises will be occupied by the named tenant or an affiliate. Clarify financing, franchise, licensing or board approvals that remain outstanding.

Request evidence proportionate to the commitment, such as financial statements, bank or trade references, business plans for new ventures, corporate information and disclosure of material contingencies. Accountants, lawyers and qualified credit professionals should interpret the information when the exposure warrants it.

3. Test the use against the property

Compare the actual activities with zoning, current municipal approval, building systems, parking, loading, access, waste, ventilation, utilities, insurance and neighbouring occupants. A tenant with strong financials can still be a poor execution fit if the use requires uncertain approvals or material unbudgeted work.

Ask who will confirm the approval path, who pays for submissions and upgrades, and what happens if the acceptable use or capacity is not approved. Avoid representing that a use is permitted based only on a listing category or prior tenant name.

4. Compare improvements and delivery risk

Define the landlord's delivery condition and the tenant's proposed work. Review demolition, design, permits, base-building upgrades, services, roof penetrations, signage, accessibility, construction access and ownership of existing improvements.

A large allowance can support a strong long-term tenant but also increases capital at risk. Tie payments to evidence, milestones, lien management, inspections and the executed lease as advised by legal and construction professionals.

5. Evaluate security in context

Consider deposits, prepaid rent, guarantees, letters of credit and other security alongside the tenant entity, term, landlord investment and recoverability. The nominal amount is not the whole answer; form, issuer, expiry, conditions and enforcement matter.

Legal counsel should structure and review security. Do not describe a guarantee as absolute or equivalent to cash without advice on the actual document and parties.

6. Respect privacy and consistent process

Use a defined screening process and request only information reasonably connected to the decision. Alberta PIPA governs personal information practices for many private-sector organizations, including collection, use, disclosure, protection and access.

Record the evidence and business reasons supporting the decision. RECA's rules require licensees to act honestly and prohibit discriminatory professional-service practices on specified grounds; obtain legal advice on the owner's broader obligations and the proposed process.

7. Score execution risk separately

Create a separate risk column for entity approval, financing, municipal use, permits, landlord work, tenant work, sector licences, possession timing and document completion. Assign an owner and deadline to each unresolved item.

A proposal can have attractive economics and still require a price, security or timing adjustment because its probability of completion is lower. Keep assumptions visible instead of hiding them inside a single net-present-value result.

8. Move the chosen offer into consistent documents

Before acceptance, reconcile the business terms with the owner's standard lease and the actual property information. Identify where the offer is binding, what remains conditional and which provisions require legal drafting.

The final lease, plans, work letter, guarantee and other schedules should tell the same story about parties, premises, use, money, work, timing and risk. A brokerage comparison supports the decision; legal, tax and credit advice remain separate professional work.