- It can be helpful to view your leasehold portfolio in terms of:
- Leases that are viable longer term as they are;
- Leases that could be viable with some variations, and what those variations might be; and
- Leases that are unlikely to be viable longer term, whatever the variations that could be sought.
- Landlords are not obliged to agree to variations or an early surrender of your leases. It is important to enter into discussions with a clear objective. To assist in these discussions, it can be helpful to share as much information as to the reasons for the requested changes as commercially possible. Consider also engaging a property agent as an intermediary to help guide negotiations.
- Ensure that any variations to your leases are recorded in writing. Permanent variations should be documented in a deed of variation and filed with HM Land Registry where the corresponding lease is registered. You should always engage a solicitor to assist with this.
- Be alive to tax implications of your proposed arrangements and take advice as appropriate.
- CVAs and other restructuring procedures should not be seen as an easy option. They come with cost, PR implications and risks of challenge. However, they can be an effective tool to compromise lease liabilities where the applicable hurdles of passing into such a process are met.
- Consider also undertaking a review of:
- which entities within the group your leases sit;
- where there are leasehold guarantees affecting other parts of the group; and
- your exposure to contingent liabilities under AGAs and historic guarantees given in connection with previous leases.
- Where possible, seek to release cross guarantees and restructure the leasehold portfolio to ensure leases (perhaps according to categorisation as referred to above) are within the right entity within your group to facilitate your future plans.
For a more detailed discussion on the issues to consider on restructuring leasehold portfolios, click here for our article "Restructuring leasehold portfolios – Q&A".
