CUTTING RENT AND GETTING PAID TO DO IT - A Tenant’s Tale

Out of nowhere, Ask-re have renegotiated an existing lease liability for a sitting tenant, producing a chunky front-end payment as well as cutting the rent and extending the lease to maximise tenant value for money. Even more amazingly, this is the second time in three years we have achieved this, putting a clear £1m+ into this client’s bank account from the same building and the same lease! How did we do this? Without giving away our know-how, we could see how to renegotiate a static lease, if the client wanted us to. We then set-to putting the technical case together to persuade the landlord to basically give back rent and with an upfront payment. Of course, there were some fairly tough negotiations once the landlord had recovered from our cheek of asking for a better deal and despite having zero leverage to renegotiate with. Over a period of about six months, we carefully extracted a restructured lease package to the benefit of our tenant client, the key features being reduced rents, a longer lease and front-end capital payment.

Long-term security of operations plus a flat property cost line for many years has made a real difference to the business by a not-obvious repackaging of existing liabilities. Although it was a bit of a nail-biter going through the landlord-side due diligence – and getting past the landlord’s “why are we doing this deal?” point – we delivered this in about 9 months. Relative to our costs, this was a very profitable investment in Ask-re’s skills by the client. ROI of about 500% is better than investment in the core business! We now have some further ideas to take revenue costs out of the business…