Related Commercial Property Case Studies

I acted for a medium size property developer who wished to acquire a four acre site immediately adjoining a major English airport for redevelopment as a distribution centre for an international courier company. 

My client was working in conjunction with and underwritten by a major national developer who wished to remain anonymous pending site assembly.  The acquisition of the interests in the site was complicated by the fact that there were at least seven different ownerships involving longstanding small businesses largely related to car repairs and similar. 

All interests had to be acquired on the basis of medium term options with a view to simultaneous exercise of the options and simultaneous sub-sale to the major developer.  This job required very much a “hands on” approach meaning that I was involved directly in negotiations with owner occupiers who had to be persuaded to move away from their existing livelihood in return for a reasonably substantial sum of money; but of course they also needed to relocate their businesses simultaneously with our exercise of the options. 

All this was successfully achieved and not only did my client benefit greatly from the successful site assembly and the sale to the major developer but the conduct of the negotiations was so amicable that I am pleased to say that I now act personally for most of those occupiers from whom we acquired the land.

I acted for a car supermarket in the south of England.  The company occupied a number of central sites in close proximity covering approximately 12 acres.  The sites were in a mixed residential and commercial area and for the most part did not have planning consent for car sales use.  There was substantial antipathy from local residents and from councillors. 

I came to this problem at the point where an Injunction had been obtained against my client for breach of such planning consent as they had – preventing a certain amount of car displays and following service of Enforcement Notices the effect of which would have been to close down a business turning over £250million and employing some 150 people. 

Appeals were launched against all Enforcement Notices coupled with substantive applications for planning consent.  In conjunction with leading planning counsel, traffic experts and planning consultants the matter was taken to a public enquiry. 

Traffic and parking issues were successfully resolved, as were issues regarding pedestrians crossing from one site to another across a major road.  The appeals were bolstered by substantial evidence which we obtained from local residents showing an element of established use not previously recognised by the local council and by offering at the Enquiry a detailed Unilateral Undertaking on matters of concern. 

The outcome was victory on every aspect with five year planning consents being granted resulting in both the profitable turnover and the many jobs being safeguarded.

A lot of commercial tenants successfully negotiate break options in their commercial leases.  This is obviously an advantage as should the economic climate change or a business prove to be unsuccessful they should be able to swiftly terminate their lease and their liabilities under the lease.

All too often landlords are quite clever in drafting their break clauses so that unbeknownst to the tenant the break clauses are only conditional on certain events happening.  In some occasions the conditionality is phrased in such a way as to make the break option fairly worthless.  A client recently came to us with a lease but did not wish to go to the expense of instructing solicitors to negotiate the terms.  The client asked us to just have a quick look over the lease from a legal perspective to see whether there was anything of particular concern.

The break option in the lease was conditional upon there being no breaches of covenant by the tenant on the date of the break option.  In essence this clause had the effect of making the break clause worthless.  If for example the tenant on termination had not painted the property contrary to its decoration covenant, then the landlord would be able to argue that they had unsuccessfully terminated the lease as they were in breach of their repairing covenants.  Missing the break clause could have had a dramatic cost to our client and they were very pleased that this was pointed out to them.

People starting a new Business or Companies looking to relocate (unless they have Surveyors acting on their behalf) have no real experience in negotiating their Heads of Terms for a prospective new letting.

In the current recessionary market tenants are in a very good position to negotiate far more favourable terms than they often realise.

Neil recently acted on behalf of a Tenant who had agreed Heads of Terms with a prospective Landlord direct.  The terms were heavily stacked in the Landlords favour. It had been usual in commercial tenancies for rents to be paid quarterly in advance.  With rent often being one of the biggest expenses for a Business having to find three months rent in advance can be difficult. Most Landlords will hold out for quarterly payments although Neil negotiated with the Landlord’s Solicitors that the rent should be paid monthly in advance rather than quarterly.  As you can imagine this has a dramatic impact on a fledgling business’ cash flow. 

Equally another expense in multi-tenanted Buildings is Service Charge. Neil negotiated with the Landlord’s Solicitors that this should be capped. The Tenant therefore knew its maximum liability. It is not always easy for a Tenant to be aware of its negotiating strength in the current market.

Neil Belcher acted on behalf of a commercial property investor who was looking to buy a commercial office with a view to letting the office to a commercial tenant.  It became apparent that the property had been VAT elected and as the property at the time of acquisition was vacant, VAT would be payable in addition to the purchase price. 

The client asked us whether there was any way they could avoid paying the VAT as the VAT element of the purchase price was circa £250,000.  They would eventually have been able to reclaim the VAT (as they were VAT registered) but in the short term there would be cash flow problems and there would be an additional Stamp Duty Land Tax liability of over £10,000 (this is because HM Revenue & Customs charge Stamp Duty Land Tax on the purchase price plus VAT (a tax on a tax!!)).

By negotiating with the Vendor that they enter into an Agreement for Lease with a third party company simultaneously with exchange of contracts for the acquisition and selling the property with the benefit of that agreement,  the property could then be sold with the benefit of a “business tenancy” therefore making the sale a “TOGC” and VAT exempt. 

This assisted the client tremendously with their cash flow and also made a considerable saving on Stamp Duty Land Tax payable to the government.  The saving was shared between our client and the vendor.  

I act for commercial property investor clients who own a range of mixed use properties be they offices, warehouses or retail or be they single or multi let occupancies.  I will manage the day to day legals that arise through new or existing lettings within a development whilst the client explores his perceived angle and looks to increase the investment value of his holding.

For example, within industrial estates those clients may well own large units and smaller units, the latter for start-up companies.  At all times, and in particular in a challenging market that is currently the case, it is vital to keep the client’s income stream flowing.  That means understanding the “bigger picture” and getting the client’s short term leases for the smaller units concluded swiftly and effortlessly whilst protecting his investment value. 

Knowing your client, understanding his targeted tenant audience and being able to communicate to those prospective occupants in a style and manner that eases a deal through is crucial.  Less jargon, more practical common sense with a down to earth approachable style is the key.  A swiftly occupied unit with a happy tenant should, in turn, make for a happy client! 

I act for a number of national and regional retail chains.  This will involve dealings with both large institutional landlords as wells as far smaller individual landlords.

Even now, with many High Streets seemingly on their knees, voids increasing on a weekly basis and empty business rates potentially accruing, it is evident that some landlords are either not being advised by their professional advisors or are not willing to acknowledge the market shift in the lettings market.  Upwards only rent reviews, potentially unworkable conditional break clauses, underlettings at the higher of passing or open market rent, full repairing leases (when plainly buildings are not in full repair), rents payable quarterly (rather than monthly) in advance are still being drafted, even where these points are seemingly covered in the Heads of Terms.

Clients need to be advised that they should not be accepting leases on this basis and to have the confidence that their solicitors are fighting their corner and ensuring that landlords come into line with good practice and, for example, the Code of Practice for Commercial Leases.  This may mean building close working relationships with a client’s letting agents so that they know what to look to include in Heads of Terms to avoid delays in negotiations down the line.  Alternatively, whilst always understanding the client’s timeframe and needs it is imperative to quietly but firmly argue the tenant’s position so that, come exchange, the client knows that when he commits to a lease it will be on terms that are neither unfair nor out of step with what a tenant should be asked to accept in the current market.

I have recently concluded a major project for the new investors of a well known nationwide client involving the transfer of over 100 properties within a tightly defined timeframe.

A steady pair of hands with a constant and persistent approach to the task at hand were optimum qualities in getting the job done.  Organisation, control, calmness as well as a rational and pragmatic approach deflecting stress away from the client whilst keeping all other interested parties fully informed, queries answered and matters constantly moving forward.

I am proud to be associated with a well loved and recognised brand and company.  With the current project successfully concluded and the client’s position re-established in the lettings market I am pleased to be one cog within their expansion plans moving forward.

John acted for the seller of a building materials company into the public sector.  John’s client’s corporate finance advisers, Bristol York Limited, had negotiated favourable terms for the sale of the client’s company, and the only problem which appeared to exist was that for tax reasons the transaction had to be completed within quite a short timescale.  The transaction proceeded comfortably, with John’s assistant Billy Ashley taking responsibility for dealing with the due diligence enquiries of the purchaser, and John’s Partner Hitendra Patel also assisting in the production of the deal documents.

A few days before we were scheduled to complete the transaction, John and his team learned that there was a problem with a contract which was key to the business of the company being sold.  This necessitated John’s working all over one weekend with the very able assistance of John’s Commercial Property Partner Andrew Woods analysing the company’s position regarding this contract, meeting the clients and finally successfully satisfying the purchaser so that on the one hand John’s client was fully protected from any claim arising in respect of this contract after completion, and on the other hand satisfying the purchaser sufficiently to enable the transaction to complete. 

The whole team, comprising the Spratt Endicott team, the Bristol York team and the client team were all delighted to conclude the transaction on time and on satisfactory and safe terms.  John was also very touched and appreciated the gift of a case of good wine from the clients to mark this completion.

Guy acted for a Pension Fund in their purchase of an investment property for c. £2million. 

He had previously acted for the same pension fund dealing with management and the sale of two investment properties, and was aware of their specific requirements and the procedures they needed to go through in reporting and obtaining instructions.  By reporting to the clients at regular intervals they were kept aware of any delays in the process, and were able to put pressure on the sellers either directly, or through the agents to prevent further delays creeping in. 

Two major stumbling blocks to exchange arose in respect of repairing obligations and the results of the environmental search.  The environmental search threw up a possible problem with regard to historic use of the site, which could have hindered/ prevented future development. 

By obtaining details of the site’s history from the Local Authority, referring the client to an environmental consultant and obtaining further information from the Seller when they purchased, the client was able to make an informed judgement that the environmental risk was low.   To overcome the repairing obligations Guy was able to negotiate and obtain an obligation on the seller to carry out the necessary works to our client’s satisfaction.

The result was that the client purchased a site well aware of any inherent problems but knowing that it had reduced the chances of those problems affecting its short and long term aims.