The closed Macy's store in downtown St. Paul may finally see a new use, as the St. Paul Port Authority has announced that it has a group of prospective tenants ready to move into to the redeveloped location. The Port Authority has signed eight letters of intent with potential tenants for the building.
The tenants include a bank, medical office and a brewery with a taproom. In addition, the estimated $60 million redevelopment of the building would have a rooftop ice rink, which the Minnesota Wild and Hamline Hockey teams would use as practice space.
You may wonder, what does the use of letters of intent in this context mean. That is a good question, and without seeing the actual letters, it is hard to know, but the use of a letter of intent in a commercial real estate deal is to tie the parties to the deal in a way that helps to further the final deal before all the details have been worked out.
They function like a contract, in that they identify important aspects of the transaction, but typically are not as demanding or binding as a fully worked out development contract would be.
A letter of intent will identify the parties, the object of the transaction, the consideration, a requirement of exclusivity for a certain period to encourage good-faith negotiations, and other binding or nonbinding requirements that will vary from deal to deal.
Like most contracts, they are flexible and tailored to your specific deal and circumstances, and because of this fluidity, you want your own attorney to provide counsel and guidance in the terms and with the drafting.
As with any document that carries legal and financial obligations, you want to ensure you fully understand every element of the instrument before you sign.
Source: bizjournal.com, "Brewery, restaurants and a bank line up for St. Paul Macy's redevelopment," Nick Halter, September 11, 2015