Lease renewals for Next
Client Name: Next Group PLC
Services: Lease advisory, lease renewals
Our Lease Advisory Team was instructed by Next Group PLC to negotiate a new lease on their store in Brentwood. The store was too small for their requirements and with a potential relocation in mind (which was a development situation with a 2/3 year timeframe until delivery) the Next board required a 3-year tenant break in each of the new leases. Initial discussions commenced between Next’s in-house surveyor and the 3 landlords’ representatives. However, the landlords refused to agree on the tenant break at the expiry of the third year of the term.
Next, therefore, instructed Brasier Freeth to negotiate a new 5-year lease with a tenant break at the end of year 3 of the term for each of the 3 new leases.
The Next Brentwood store had been put together over the years by combining 3 adjoining shop units to create a store of circa 475 sq m on 2 levels. The store was now owned by three different landlords who were liaising together on the lease renewal. Negotiations were, therefore, more complex than usual and required reaching an agreement with each landlord on every term of the lease or issue that arose throughout the negotiations and the legal process.
When negotiations commenced all 3 landlords were opposed to the 3-year tenant break and required either a straight 5-year lease or preferably a 10-year lease with a 5-year tenant only break clause.
Following various discussions, some of the landlords suggested they would consider a 3-year break but linked to an enhanced rent or penalty payment. This was not acceptable to our client.
This transaction required an enormous amount of perseverance and patience throughout the process. Each point that arose as a potential issue involved three lots of discussions, negotiation, persuasion and ultimately agreement.
Eventually after protracted negotiations over the course of almost a year and with the threat of Court looming, one of the landlords agreed to grant the 3-year tenant only break without any form of penalty. After further negotiations with the remaining landlords, both eventually agreed to a tenant only break at the expiry of year 3 and agreement on all other terms swiftly followed.
The leases were finally concluded almost a year after we were instructed to commence negotiations and as the timing of their relocation has subsequently been delayed we continue to assist our client re-negotiating the expiry date of the break clause to the 4th year of the term.