The following describes just one situation in which FraserCRE has acted for this client. The lease in question was a former trade retail store in a poor condition and was due to expire in January 2021. The landlord had a history of aggressively managing the property, and had been difficult to work with in previous negotiations. We advised Legacy Portfolio to make an IFRS12 provision of £2.6m on a gross cost to expiry of £3.6m. The property had received little interest from prospective tenants and any interest had been at significantly lower than the passing rent, and required the payment of large tenant incentives.

FraserCRE established that the freehold valuation was well below the value of the landlord's loan of £3.1m. Given the current status of the local leasing market, vacant value indications, and the provision set aside for the property, FraserCRE advised the client that the best course of action would be to purchase the freehold and seek to sell it on to a trade operator. FraserCRE advised the client to offer £3.1m with a delayed six-month completion, having previously identified an owner/occupier interested in the site. The sale completed five months later saving the client over £1m.

This case is a typical example of the creativity and innovation that FraserCRE bring to bear when working out surplus leasehold portfolios. As well as being relentless in their pursuit of standard lease surrenders, in more difficult cases such as this they are still able to find a highly profitable exit solution.

Steve Hallam
Chief Financial Officer
Legacy Portfolio