Our mission is to help clients identify and unlock value tied up in their leases and maximise the return from this business asset.
Contracts cannot be broken but there is nothing to say they cannot be altered by negotiation and mutual agreement. A lease is a contract that contains many obligations presenting opportunities for negotiating mutually beneficial changes. Maximising these opportunities can have a significant positive impact on a business and we pride ourselves on spotting them and negotiating the deal that releases the most value.
In the majority of cases it will be an upcoming tenant’s break option that can be used to force the landlord to the negotiating table. It provides the chance for a business to reassess its property needs and use it as leverage to release value.
However, it is critical that sufficient time is allowed to analyse the situation and decide on the best way forward. Break options normally require 6-12 months’ notice to be operated and there is a lot that needs to be considered before a decision can be made on how to utilise it. Far too often this highly valuable opportunity is missed to the detriment of the business.
It is not only the presence of a break option that presents this opportunity. In essence restructuring a lease generally takes the form of agreeing a longer term and this can be considered at any time by agreeing to extend the term of the lease.
Whether removing a break clause or agreeing to extend the term, this provides the landlord with a longer secured income stream and delays the risk of incurring costs of re-letting the property. This creates value for the landlord which can be shared with the tenant that has ultimately created it.
The trick is having the market knowledge and technical expertise to quantify this value and negotiate the highest possible share.
There are a number of ways this value can be released to the tenant. In pure cash terms this could be through a reduction in rent, a rent free period or a capital contribution from the landlord towards improving the property. It could also take the form of removing or softening onerous lease clauses such as reducing repairing obligations, limiting service charge liabilities or allowing sub-letting of part of the space.
Ultimately the outcome will depend upon the motivations of both parties and it is our experience and knowledge that allows us to assess these factors and arrive at the optimum result.