What Commercial Real Estate can Learn from Newsweek's Unraveling
Newsweek's lower Manhattan offices were raided by the Manhattan District Attorney's office and seized, among other things, the company's servers. What instigated the raid was a loan officer's concern over Newsweek's audited financial statements, and whether Newsweek's auditors were even legitimate. Had the lessor engaged an outside party to conduct tenant diligence on Newsweek, there is a chance that it would not be on the hook for hundreds of thousands of dollars in unpaid rent.
Investigators in Newsweek's Manhattan Office
Source: Josh Saul / Newsweek
Newsweek worked out of the Guardian Life Building (7 Hanover Square) in lower Manhattan, and since the drama began unfolding, the magazine has allegedly fallen behind on its rent in excess of $100,000. The issue stems from Newsweek's finances, and according to the Wall Street Journal, investigators found errors in Newsweek's audited financial statements raising red flags about their legitimacy. Adding to their concerns, the existence of the auditor could not be verified at the time.
The investigation into Newsweek will continue to unfold, but in the meantime, the publisher will likely leave a trail of unpaid rent to its lessor (in this case Guardian Life Insurance). TRA specializes in reading and understanding financial statements, and in many cases has found errors that lead clients to put out of lease negotiations. Tenant diligence takes on many forms, and TRA helps its clients protect their rent rolls on every transaction.
