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The journey for every business is different. We listen to you and your objectives before proposing a plan for survival and growth. We work alongside you and your team and focus on protecting and improving your wealth.

Published on 24 November 2011by Tony Groom

Times are Tough for Commercial Landlords

Commercial landlords are coming under pressure from all sides in the current

economic climate.

The plight of those landlords in the retail sector has perhaps been the most widely

publicised as more and more empty shops appear on the High Streets where retailers

have either ceased trading or moved out of expensive and badly performing outlets.

The problem for landlords is the double pressure of receiving no rent for their empty

properties while still being liable for paying expensive business rates. With business

rates calculated at approximately 40% of estimated annual rental value the burden

on landlords can be considerable.

Recently Dixons, owner of Currys and PC World, revealed that it had agreed with

some of its landlords, to pay rent of just £1 a year in exchange for Dixons continuing

to pay the business rates. Dixons is not the only retailer with business rate only deals

with landlords.

Many commercial landlords are struggling as their tenants downsize, restructure or

go out of business altogether, leaving empty industrial and office units for whom new

tenants are hard to find. They still have to service their own loans as well as securing

their empty premises and paying rates.

Compounding the problem is the change in attitude among lenders towards

property companies. Property loans are generally provided by banks who are now

asking for much more equity and much better tenant covenants with evidence of a

secure income when considering new or renewal of commercial mortgages.

K2 Business Rescue The Emergency Service for Business

Call Tony Groom on 0844 8040 540

Banks are already overloaded with vacant and distressed property assets. While they

are often reluctant to appoint Receivers to recover assets pledged as security for

loans, especially while interest on the loan is being serviced, it still reverts to the bank

when the borrower goes bust.

The confluence of pressure is leaving many commercial landlords completely boxed

in, often with empty premises on their hands, unable to service mortgage liabilities,

unable to pay business rates and increasingly dealing with creditor pressure such as

winding up petitions.

Another issue is the amount of commercial property on the market. There are a large

number of industrial estates suffering with ‘For Sale’ signs on empty as well as

occupied premises. And there are few potential tenants, with most of the interest

coming from firms that are downsizing.

A related issue is the number of businesses that cannot be sold because of an

existing lease obligation. Buyers often want to downsize and therefore are seeking to

renegotiate lease terms before purchasing the business.

There are formal and informal restructuring options that can be used to help

commercial landlords who are dealing with vacant and loss-making properties.

However, restructuring property portfolios is a complex process and every single

situation is different. Essentially this is a situation that requires the knowledge and skill

of an experienced restructuring adviser who will look at each component of the

assets and debts in the portfolio as a matrix, and find the right solution for each

component.

We are not Insolvency Practitioners. We operate within the law to protect our clients and their wealth. Our team has worked for over 20 years to help stabilise and return hundreds of businesses to profitable growth. Once appointed, Insolvency Practitioners do not work for you, they work for creditors and use your company’s assets to pay themselves. We work for you, not creditors.

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K2 Business Rescue The Emergency Service for Business

Call Tony Groom on 0844 8040 540

Need Immediate Help – Call Tony Groom on 0844 8040 540