A bird in the hand is worth…

COMMERCIAL
Share

It’s been nearly a year since the first Covid 19  lockdown began, and the strain on many commercial property tenants continues to build, particularly in the retail and hospitality sectors where Lockdown 3 limits trading to Click & Collect or prevents it altogether.  Government grants, Business Rates holidays and furlough schemes help but are no substitute for actually being able to trade.  They must have our ongoing sympathy.

Sympathy must also be due for commercial landlords who have also struggled during the pandemic.  They’re not an obvious group to feel sympathy for in many people’s eyes, but the fact is that they have not been offered any assistance from government and so are left with the task of grappling with the issues of distressed tenants on one hand and commercial mortgage repayments on the other.

Every case is different, with every landlord, tenant and building having unique requirements.  Our commercial property management team have worked with all of our clients during this time, and we have helped our clients navigate these difficulties by arranging payment plans, agreeing the terms of discounts or rent deferrals and keeping track of the execution of those arrangements, while also ensuring buildings insurance requirements are fulfilled while buildings are enforceably empty.

Government intervention has played a role in this, and we have also helped advise clients on impact of the government’s voluntary Code of Practice for commercial property relationships during the COVID-19 pandemic, as well as the suspension of “Landlord’s remedies”, such as instructing bailiffs, forfeiting lease and issuing statutory demands.  These protections, due to end in March, will in our opinion most likely be extended to June.

A bird in the hand used to be worth two in the bush, but for commercial landlords this exchange rate has surely changed – surely it’s now worth three or four in the bush?  We have advised landlords on agreeing short term assistance in return for a longer lease term – an implicit understanding that a landlord is investing in the future of their tenant.

Don’t forget though that the loss of a tenant can create new opportunities.  One of our clients, the freeholder of Pizza Express in Whitstable, unexpectedly had the unit returned to them during Pizza Express’s Company Voluntary Arrangement (CVA) – a form of administration – and Sibley Pares were able to identify two realistic proposals in the market and conclude a deal at a better rent than Pizza Express were paying!