DeVono specialise in both the restructuring and the re-gearing of commercial property leases, specifically and only on behalf of tenants/occupiers. We do not on any occasion act for landlords and have drawn this line of distinction to avoid the inherent conflicts of interest that acting for both landlords and tenants on these matters would expose us to.
There is no statutory framework for either restructuring or re-gearing a commercial lease, instead they each depend on the willingness of both landlord and tenant to amend their existing lease obligations. Lease re-gears are most often brought about by a tenant (or landlord in certain scenarios) using an impending option to break their lease as leverage to force a landlord to the negotiating table.
To ensure the best possible outcome, planning for a lease re-gear should typically commence between 6-12 months in advance of the notice needing to be served to confirm an option to break an existing lease.
All too often this important lease event is simply not considered by occupiers until a time too close to a lease break. In many cases the opportunity to really take advantage of the situation is lost. This is simply due to the vast amount of time needed to professionally address all of the many moving parts that make up a successful commercial lease re-gear.
It is also possible to undertake a restructuring of one’s lease, irrelevant of whether or not an impending lease event such as an option to break, exists or not.
Typically, though not exclusively, both a restructure and a re-gear will involve the occupier extending their lease term, or removing a break option within their existing lease, in exchange for incentives from the landlord. Incentives range from such examples as a cash lump sum, rental reduction, rent free period or the removal of onerous terms from the lease.
Both of these particular lease events provide tenants with a rare opportunity to take stock and evaluate their position and property needs, for what is most often the next 3, 5, 10 or 15 years. Dealt with properly, each present us with the potential to effectively leverage an improved position, sometimes vastly so, on behalf of our clients.
We have a proud record of successfully unravelling the situations and the arguments that present themselves when looking to either restructure or re-gear a lease. When coupled with our unrivalled knowledge and access to comparable deals being completed in the wider market place, we are able to firstly assess the specifics of each new project, before going on to apply the evidence we uncover to the benefit of our clients.
If tenants are to avoid missing these opportunities and have any ambition of achieving positive outcomes that meets their business needs, then a detailed and up to date knowledge of the following is essential;
- Market conditions
- Anticipated trends
- Comparable evidence (up-to-date, actual and detailed)
- Future service charge expenditure
- Development provisions
- Cost Analysis (renewing against moving)
DeVono have a successful past in representing businesses with Lease Renewals and we actually enjoy the challenge that they bring to our business.
Search here for clients we have represented.