Lease of 171 serviced apartments as part of an office conversion
POHA leased 171 serviced apartments in a former office building. The lease had to secure POHA’s standards and requirements despite the project still being at an early stage of development, while at the same time allowing the landlord sufficient flexibility to further develop the design and deliver the project.
The client.
POHA is a growing serviced apartment operator with an expanding portfolio across Germany. For new locations, POHA enters into long-term leases and works with property owners to develop the properties for its operating concept.
What the matter was about.
POHA was looking to lease 171 serviced apartments in a former office building that was still at an early stage of its conversion. We were instructed to review and negotiate the landlord’s lease draft and take the project through to signing.
A key challenge was to translate POHA’s design, quality and operational requirements into binding contractual standards while the planning was still evolving. At the same time, the lease needed to leave sufficient flexibility for the landlord to further develop the design and respond to requirements from planning and building authorities.
Against a challenging market and financing environment, the project also required several rounds of commercial alignment. Throughout the negotiations, our role was to help move the deal forward pragmatically wherever possible, while holding firm on the points that were essential to POHA’s future operation of the property.
How we worked
The process, step by step.
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Initial Review
Review of the landlord’s draft against the agreed Heads of Terms and POHA’s lease standard. Link to case study 1
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Alignment with P
Discussion of the draft, key deviations and negotiation priorities with the Head of Expansion and CEO at POHA.
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Draft Revision
Comprehensive revision of the landlord’s draft on the basis of our review and alignment with the client.
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Negotiation
Negotiation of the lease with the landlord and its legal advisors, focusing on the points that mattered for the project and POHA’s future operations.
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Iterative Alignment
Further rounds of drafting, negotiation and internal alignment as the planning and commercial terms evolved.
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Schedules & Annexes
Coordination and finalization of the extensive schedules and project documentation forming part of the lease.
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Signing
Final alignment of the transaction documents and support through to execution of the lease.
A lease that works for both the project and the future operation.
After around eight months of negotiations, POHA signed the lease for 171 serviced apartments. The final agreement protects the standards and requirements that are essential to POHA’s future operation of the property.
Just as importantly, we helped keep a complex deal moving through changing planning, commercial and financing parameters.
Throughout the negotiations, we kept the dialogue constructive and respectful, helping preserve a strong landlord-tenant relationship for the intense construction phase and the many years of the lease ahead.
FAQ
Questions on this kind of work.
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Do you also advise landlords?
Yes. We advise both landlords and tenants on commercial leases. Working on both sides of the table helps us understand which positions genuinely matter to each party, anticipate where negotiations are likely to become difficult and identify solutions that can get the deal done.
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When should legal counsel get involved in a lease negotiation?
Ideally, before the Heads of Terms are signed. Key commercial and project-specific points agreed at HoT stage often determine what can realistically be achieved in the lease negotiations. Early legal input helps identify the issues that should be addressed before the main parameters of the deal are fixed. That said, we regularly step in at a later stage and work from already agreed Heads of Terms.
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How do you decide which points are worth fighting for in a lease negotiation?
Not every deviation from the preferred position carries the same weight. We prioritize based on the commercial impact, operational relevance, legal risk and the specifics of the particular deal. Good negotiation is not about winning every point; it is about knowing where compromise is possible and where it is not.
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Why does the way a lease is negotiated matter after signing?
For development projects, signing the lease is often the beginning of a long working relationship. Landlord and tenant still need to navigate planning, construction and handover together before the operational lease term even begins. Protecting the client’s position and maintaining a constructive working relationship are therefore not competing objectives. Good negotiations should achieve both.
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