Co-tenancy an added danger

Landlords whose retail tenants are facing bankruptcy could feel similar pain thanks to the co-tenancy clauses of many lease agreements. The clauses allow store owners to take several options — including not paying rent — when key tenants leave a shopping center. The clauses sometimes make leases contingent on certain anchor tenants because those big-box stores drive most of the traffic to smaller stores. Other options triggered by co-tenancy clauses can include lease termination, reduced rent for a certain period or payment of a percentage of sales only. Greg Lotzar, South Florida leasing director for Weingarten Realty Investors, a Houston-based real estate investment trust, said his firm and many others are now struggling as anchor tenants face mounting troubles.