Commercial Property Blog
All posts tagged: andy-teacher
Retail lifeline vs upward only rents: is 'down' the new 'up'?
One of the few rock’n’roll heritage sites not ripped from the cultural spleen of the West End by the rupturing menace of Crossrail, the nuisance of relentless rickshaws or Westminster Council’s brutal licensing regime is the 100 Club. Nestled beneath an unsuspecting 1960s office block and wedged between two anonymous shops (ones with constant 70% discounts), it witnessed an unlikely gathering of some of the City’s most senior lawyers a couple of weeks ago.
Luckily, they weren’t there to take occupancy, but were committing another crime: murder. Of the musical kind: many great songs died that night as part of the Law Rocks charity event. Like Party Near the Park without the drag.
Property folk will be pleased to learn that Hogan Lovells were one of the better acts there. Fronted by the Fender-baiting frontman, Matthew Ditchburn, who’s slightly reminiscent of Tim Wheeler (from Irish band Ash, rather than the now-defunct Brixton group), who led them through a set of nineties/noughties hits.
Needless to say, the world of Green Day is a universe away from Quarter Day and Ditchburn’s normal role helping the major Reits and pension funds patch up their retail portfolios with CVAs and pre-packs. And while the insolvency and restructuing partner no doubt secretly possesses a carefully curtained hope of being the opening act when they eventually re-commission Top of the Pops, he’s become one of the leading spokesmen in the industry’s fight with failing retailers.
Which takes us nicely to the front page of the current issue of Property Week, reporting that the major landlords have finally agreed a much-talked up standardised lease. Coming three years after Land Securities launched its own Clearlet, it has always made sense to simplify the process. And while many still see the property industry as exceling in being stuffy, conservative and unwilling to shift, I’ve been privileged to see first hand how firms have evolved through innovation at the top.
The Reits and pension funds will of course fear more than a few extra hours of legal fees will be the recurring threat of an upward-only rent review ban. Mary Portas, following her “review” for the government (which seems to have doubled up a rather lucrative commercial deal for TV shows and publicity), seems to be blundering towards the very point if reports are to be believed.
Clearly, no amount of deckchair shuffling with shorter leases is going to stop deserting the likes of Clintons, Game or Peacocks. And with the continuing dominance of Land Securities, Westfield and British Land in prime retail, the divide between primary and everything else will only widen over the coming months, becoming a self-perpetuating spiral for unloved retail space.
The threat of a ban on upward-only rents would exacerbate the situation, meaning more landlords across the industry need to pull their socks up and try and future proof their tenants, and themselves. Whether that’s through clearer leases, monthly rents or donuts on a Friday morning remains to be seen.
Maybe what we need is a 100 Club on every British high street?
Clintons: Shoplifters of the world unite!
Clintons: Shoplifters of the world unite
The Smiths song ‘Unhappy Birthday’ opened with the lyrics: “I’ve come to wish you an unhappy birthday / Because you’re evil and you lie / And if you should die / I may be rather sad, but I won’t cry.”
That was how most people felt when Clintons finally folded yesterday.
The 44-year-old retailer - named after founder Don Lewin’s son, Clinton - was as much a part of Britain’s social fabric as Kenny Dalglish and Maggie Thatcher. Like Morrissey, they all enjoyed their peak periods in the eighties. (And are seemingly also living in denial for some time as well.)
But while King Kenny is still fondly remembered by the Reds as Thatcher is by the Blues, the nation’s favourite card store seems to have folded with all the joyful whoops rusually reserved for the kind of tabloid-drubbing dished out to Rebekah Brooks.
Perhaps it was because this – more than any previous administration – had been such a long time coming. There wasn’t a landlord, investor or journalist who hadn’t seen the crows circling since Birthdays was put into administration three years ago, almost to the day.
What was almost as amazing, was the hilarious spin machine put into action (probably by the administrators’ PRs) that placed rumours that WHSmith was apparently “considering” a bid for Clintons. Having successfully pulled rabbits out of hats year after year, Kate Swann, on what must surely be a similar knife-edge of dwindling consumer demand, would surely be nuts to take on more high street exposure?
It was what Clintons did when it splashed out over £46m on Birthdays in 2004, let us not forget, in spite of the internet clearly starting to hit traditional postal greetings. When Clintons put the firm into administration just five years later, the writing was on the wall with a giant great bunny stapled to the front.
And while this went on, with debts being run up all over the show, why was no restructuring put in place then?
Some have criticised the banks for displaying this same lack of ‘moral responsibility’ pulling funding. Indeed, there’s a large dose of irony seeing the slivery George Osborne bang on about supporting British firms while our State-backed banks fund private equity groups as they asset-strip once successful businesses, having pulled the rug from the principle company executives.
But when your shareholders are the public and the retailer is so clearly buried, it’s a hard for one to argue.
Of course, the major problem was Clintons’ paying over the odds for plump spots on the high street – something American Greetings clearly needed to fix when it bought the company and subsequently called in its debts. And with other firms teetering on the edge over the summer, the rebasing of high street rental values could continue for some time.
At the end of the day, successful enterprise comes down to the balance of risks. The current insolvency epidemic swings that too far in one direction. A large creditor higher up the food chain may get a few million pounds, while SME unsecured creditors will be lucky to get paid anything. The hit for them will be far worse as a result.
If no one can trust anyone to pay, that itself undermines the very enterprise we keep telling ourselves will get us out of recession. If we’re serious, maybe we need to change the record on insolvency regulation?
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