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British Land et al

Dod101
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British Land et al

#329643

Postby Dod101 » July 30th, 2020, 11:24 am

I notice in the Times this morning that Legal & General, which is quite a big property investor, 'has overhauled its leasing model' It is 'moving away from long term leases with upward only rent reviews to offer more flexible terms focused on rents linked to store performance'.

Fundamentally, the rent will be linked to the turnover of the business, the idea being that the risk and rewards are then more evenly shared. That will presumably help to avoid the stand offs we have seen in recent times but if bigger landlords like British Land and Land Securities have to follow suit I wonder how that will affect them?

Apparently this model is common elsewhere (in the US, France and Germany for instance) and I have seen it working for myself in Hong Kong. It is then in the landlord's direct interests to keep shopping malls attractive for shoppers and they very much want to increase the footfall so they are much more into 'managing' the mall and the tenants than is probably the current case where they can be in conflict with the tenants where they are simply rent collectors.

Dod

PinkDalek
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Re: British Land et al

#329649

Postby PinkDalek » July 30th, 2020, 11:34 am

Although not 100% related to your post, I read and bookmarked this the other day from 2015 or thereabouts, as I felt it gave a good explanation of the various methods which could be applied - including using a Base Rent (linked to CPI) etc.

https://www.colliers.com/-/media/files/emea/easterneuropeaninformation/2014eeresearchpage/retail/ee-2015-tenuous-turnover-omni-channel-impact-final.pdf?la=en-gb

That will presumably help to avoid the stand offs we have seen in recent times ...


We'll see (talking on a personal level). ;)

dealtn
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Re: British Land et al

#329721

Postby dealtn » July 30th, 2020, 2:41 pm

Dod101 wrote:... It is then in the landlord's direct interests to keep shopping malls attractive for shoppers and they very much want to increase the footfall so they are much more into 'managing' the mall and the tenants than is probably the current case where they can be in conflict with the tenants where they are simply rent collectors.

Dod


I think that's a huge simplification if you are claiming Landlords such as BLND and LAND are "simply rent collectors". Their mall operations are operated to consistently make them attractive "venues" for footfall, and have had numerous developments to make them so. This probably applies to other REITs too, but my knowledge is thinner.

In addition retail is a minority of the business for both those REITs too.

Dod101
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Re: British Land et al

#329741

Postby Dod101 » July 30th, 2020, 3:35 pm

Well I am simply quoting the landlord. 'Our role as owner is shifting from what was solely 'the librarian'- collecting rent, renting shops and cleaning spaces-to becoming an 'editor' of the space.' I agree that that is a simplification but they are not my words.

My point however is not so much that but more that the move should help to align the interests of both landlord and tenant much more than they has been and still is for that matter and may well bring, especially at the present time, less income for the landlords. I am only mentioning British Land and Land Securities but of course it could well affect many more landlords as well and should help a number of businesses.

Dod


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