Danielle Charles’ Post

Please find attached details of a prime retail store investment which we have been instructed to sell. The investment is let to the undoubted covenants of Marks & Spencer PLC and Poundland. Marks & Spencer PLC have an unexpired term of approximately 12.5 years to expiry, while Poundland have an unexpired lease term of approximately 5.3 years, having taken a new lease in September 2023. The WAULT to expiry is c.11.2 years and c.7.1 years to break. Gloucester is an historic cathedral city which is ranked in the top 75 UK retail centres and is the 9th fastest growing city in the UK. The property occupies a prime trading location, with frontages onto the pedestrianised Eastgate Street and Southgate Street, the main retailing thoroughfares in the city. The total gross passing rent is £568,750 pa with a net operating income of £508,750 pa, following the deduction of the head rent. The property is held long leasehold with c.112 years unexpired at a current head rent of £60,000 pa. The tenants overall occupational costs are assisted by the terms of the head lease which provides an attractive low service charge payable by both tenants, with the total service charge being £29,320.18 for the current year. Our client is requesting offers in excess of £3,900,000 (Three million nine hundred thousand pounds)subject to contract and exclusive of Vat, reflecting a Net Initial Yield of 12.25% net of standard purchaser’s costs and a low capital value of £44psf. If you require any further detailed information, then please do not hesitate to contact Philip Hay or Rhodri Jones.

Please find attached details of a prime retail store investment which we have been instructed to sell. *The investment is let to the undoubted covenants of Marks & Spencer PLC and Poundland. Marks & Spencer PLC have an unexpired term of approximately 12.5 years to expiry, while Poundland have an unexpired lease term of approximately 5.3 years, having taken a new lease in September 2023. *The WAULT to expiry is c.11.2 years and c.7.1 years to break. *Gloucester is an historic cathedral city which is ranked in the top 75 UK retail centres and is the 9th fastest growing city in the UK. *The property occupies a prime trading location, with frontages onto the pedestrianised Eastgate Street and Southgate Street, the main retailing thoroughfares in the city. *The total gross passing rent is £568,750 pa with a net operating income of £508,750 pa, following the deduction of the head rent. The property is held long leasehold with c.112 years unexpired at a current head rent of £60,000 pa. *The tenants overall occupational costs are assisted by the terms of the head lease which provides an attractive low service charge payable by both tenants, with the total service charge being £29,320.18 for the current year. Our client is requesting offers in excess of £3,900,000 (Three million nine hundred thousand pounds) subject to contract and exclusive of VAT, reflecting a Net Initial Yield of 12.25% net of standard purchaser’s costs and a low capital value of £44psf. If you require any further detailed information, then please do not hesitate to contact me or my colleague Philip Hay.

On GCW's website, under Opinions, Michael Hardy's Opinion. "From Retailer to Landlord" is, with respect, nothing new. Ok, it's relatively new for entire shopping centres but not for freeholds otherwise. Long ago, British Shoe Corporation bought the freehold, as did C&A, Boots, F Hinds, John Lewis, most independent department stores, and several other multiple retailers. I used to act for Waide Pollard & Sons Ltd - until they went broke after more than 100 years - amongst their 76 branches were a few parades of shops where they occupied one or two units; the other shops let. One of my regular clients used to have some 45 branches, which, when it sold the business, kept the freeholds, a few of which it still owns. As for one-off landlords, many were owner-occupiers before selling the business on a new lease and keeping the freehold as investments. Speaking of which, where a landlord, having been the owner-occupier, grants a new lease in conjunction with the sale of the business; generally, the initial rent is based on the profitability of the business. At the first rent review, chances are that it'll be a nil increase because the initial rent was over-rented compared to the open market rent (as defined by the lease). The test of whether an initial rent is the same as the open market rent (as defined by the lease) is that if there were a rent review on the same day as the term commencement date, it would be the same rent. I've lost count of the number of ex-owner-occupiers now landlords, for whom I've acted, who've been disappointed at the outcome of the first rent review. If only, as I tell them, they'd consulted an experienced surveyor, not necessarily me, they would've been advised how to avoid nil increase. Interestingly, considering how much of a favour such tenants think they're doing, landlords whose rents are index-linked to cap and collar are likely to get at least the minimum increase. I have landlord clients - I am sure other surveyors and other professional advisers, for example, lawyers and accountants, do too - who wouldn't let their shops go to betting offices or amusement centres, or such like, because they don't approve of gambling. Fair enough, but ironic. Usually, their commercial property investment rent reviews are to open market rent. An open market rent is a gamble - a high risk - because the valuation methodology is invariably comparable evidence, which means relying on what other landlords and tenants have agreed. Where evidence is scarce or non-existent, opinion evidence is also risky because a third party whose opinion is binding under the lease might not agree.

Risk of Pursuing an Unsustainable Economy: Presaging the Ultimate Destiny of the Alberta Tarsands Tarnation? Globe & Mail - Susan Krashinsky Robertson: The Body Shop to close nearly a third of stores in Canada, seeks creditor protection. The Body Shop plans to close nearly one-third of its stores in Canada & is seeking protection from its creditors, just weeks after its U.K.-based parent company also began restructuring under its new owners, German private equity firm Aurelius Investment. 
On Friday, The Body Shop Canada Ltd. filed a “notice of intention” under the Bankruptcy and Insolvency Act with the Ontario Superior Court. The process will “provide additional breathing room while it evaluates its strategic alternatives and implements certain restructuring initiatives,” the company wrote in a press release on Friday.
 The Body Shop operates 105 stores across Canada, 33 of which will immediately begin liquidation sales. The Body Shop has more than 700 employees in Canada. The press release did not specify how many jobs would be cut as part of the restructuring.

While all of the Canadian stores remain open, the e-commerce site ceased operations on Friday. The Body Shop will no longer sell gift cards in Canada and will not accept existing gift cards – a move that will mean a loss for customers still holding on to holiday gifts. The Canadian stores are also no longer accepting returns, even for purchases made before the restructuring began.
 As of Feb. 26, The Body Shop Canada owed more than $3.3-million to its creditors, according to documents filed with the Office of the Superintendent of Bankruptcy Canada on Friday.
Also on Friday, The Body Shop US Ltd. immediately ceased operations and closed all of its stores in the U.S. 
The cosmetics retailer – known for its fragrant mall stores and products promising cruelty-free standards and natural ingredients – has lost considerable value in recent years. Aurelius acquired The Body Shop last November for £207-million, or roughly CAD$350-million, just a fraction of the €1-billion that Brazil-based company Natura paid to acquired the retailer from French cosmetics giant L’Oréal in 2017. 
In its announcement of the acquisition last November, the private equity firm wrote that “despite the challenging retail market there is an opportunity to re-energise the business to enable it to take advantage of positive trends in the high-growth beauty market.”

Aequo advises Dragon Capital on the acquisition of Karavan Outlet shopping mall, one of the largest outlets in Kyiv from DCH Investment Management (DCH). LLC DK Kyiv Outlet, which belongs to Dragon Capital Group, has finalized acquisition of 100% share capital of Trade Solutions LLC. Prior to completion of the transaction Trade Solutions LLC used to belong to DCH Investment Management (DCH) group – the former owner of Karavan Outlet shopping mall (Kyiv). As a result of this transaction Dragon Capital expanded its commercial real estate portfolio. Karavan Outlet opened its doors in 2003 and was renovated in 2019. It was the first shopping mall established in Kyiv and is currently the largest outlet shopping mall in the capital. The overall size of Karavan equates to 57 321 sq m, with 42 788 sq m of rental areas. The shopping mall represents over 50 international fashion brands, has a five-star cinema, a roller skating center, an indoor playground, a supermarket and a food court. Aequo team is honored to have assisted our strategic client Dragon Capital with this transaction. Aequo’s Real Estate and Construction team experts (Iurii Gorda – Counsel, Yevheniia Chernetsova – Senior Associate, working under the supervision of Executive Partner and head of practice Yulia Kyrpa 🇺🇦) conducted legal due diligence of the target, advised on the terms and conditions of the sale and purchase agreement, ensured that all conditions precedents were fulfilled prior to completion of the transaction and assisted with completion of the transaction. The merger clearance for this transaction from the Antimonopoly Committee of Ukraine was secured by Aequo’s Antitrust experts Sergiy Denisenko, partner, and Vitalii Savkov, associate. “We are grateful to Aequo’s team for assisting us with yet another significant project. The experience and professionalism of our legal advisers allowed us to conduct a most thorough evaluation of the target, as well as successfully structure and complete the transaction within the anticipated timeframe,” – noted Ievgen Baranov, Managing Director of Dragon Capital. “We are exceptionally grateful for the decade of successful cooperation with Dragon Capital and were glad to assist our client with yet another one landmark transaction. Expansion of commercial real estate portfolio by Dragon capital during wartime demonstrates recovery of this industry. This investment is a positive sign for foreign investors, since it highlights that local market leaders believe in Ukraine’s victory. Working on the trendsetting real property transactions during wartime is a big responsibility. We are grateful to Dragon Capital team for their trust and cooperation,” said Yulia Kyrpa, Executive Partner of Aequo, Head of Real Estate and Construction practice.

An interesting recent Supreme Court of NSW case considers the validity of relocation notices issued under s 34A of the Retail Leases Act 1994. Paddy’s Markets in Haymarket is being redeveloped and relocation notices were issued to stall holders under s 34A of the Retail Leases Act 1994. Stall holders unsuccessfully challenged the relocation notices on various grounds. The Court considered whether the notices contained sufficient details, whether the redevelopment needed to be sufficiently mature at the notice date, and whether the alternative premises had to be commercially similar. The key takeaways from this case are that: - A relocation notice does not need to include a proposed relocation date, it only needs to provide at least 3 months’ notice of relocation. The Court distinguished between s 34A(a), which prevented relocation before details of the proposed redevelopment were provided, and s 34A(b), which required 3 months' notice to be given. The requirement in s 34A(a) could be satisfied after issuing the notice in s 34A(b), but prior to relocation; - It is not necessary to furnish every detail of the proposed redevelopment nor for a DA to have been obtained at the time of issuing the relocation notices. However, enough information must be given to conclude whether or not there is a genuine need to relocate; - Factors the Court considered in assessing the ‘genuineness’ of the relocation notice included that a DA had been submitted, the DA was available to be viewed online, plans and reports had been prepared, the head lessee had approved the development, and the proposal had been in the media; and - The alternative premises does not need to be commercially similar. The emphasis is on ‘alternative premises’, being one that provides a lessee with a shop offering the same ability to operate the existing business. The case is Cheng v Sydney Markets Ltd; Gao v Sydney Markets Ltd; Weng v Sydney Markets Ltd [2024] NSWSC 755 with judgment handed down on 20 June 2024.

Simon Property Group would put up no capital to buy Express. That price could explain why the mall REIT is willing to jump back into ownership of retail tenants, after scaling back over the past several months. https://lnkd.in/ehhE-wGG #tradeguard #receivableputoptions #arputs #receivableputs #tradereceivables #accountsreceivables

As Simon Property Group gets ready to buy EXPRESS with no money on the table the art of being both a landlord and a tenant management company is getting interesting. "Show me the money....Nope!" Do you think all that sales revenue from all their other mall tenants including competition doesn't come into some serious review in a deal like this? #acquistions #landlords #reits #fashionretail #showmethemoney

KaDeWe files for bankruptcy: The impact of the insolvency of the Signa group is now affecting the retailers it controls with now the KaDeWe group filing for bankruptcy. Big news for this celebrated German luxury retailer who is stating high rentals in its three locations as the main reason. No doubt a move to renegotiate the agreements. The post-covid return to retail and KaDeWe's positioning was not enough to keep it in profitability and now the new leadership at KaDeWe will need to also re-look how to accentuate and further build on luxury in Germany. There is a place for KaDeWe in Germany and I hope to see it pull-through this phase.

“High Street Revival?” Pull the Other One Ah, the UK high street—a tragic soap opera starring empty shops and overpriced rent. Yet, we’re told barbering and beauty are booming. Shops opening everywhere! Growth! Success! Let’s be honest, this isn’t growth; it’s a slow-motion car crash. The NHBF (National Hair & Beauty Federation) loves schemes like High Street Rental Auctions. “Let’s fill those empty shops!” Fill them with what? False hope? More doomed businesses? It’s a distraction from the real issues. The £90,000 VAT Trap The VAT threshold is £90,000. Sounds decent, right? Except running a shop costs more than that. Earn just over, and HMRC comes knocking with a 20% tax bill. So, what do shops do? They stay under, cutting prices, corners, and sometimes the law. Barbers or Backroom Businesses? How does a £6 haircut shop survive? Spoiler: it’s not clever budgeting. Some aren’t just cutting hair—they’re fronts for: 1. Money Laundering: £10 trims? Or £10,000 “cleaned” cash? 2. Human Trafficking: “Apprentices” working 14-hour shifts and living in cupboards. 3. Tax Evasion: Declare less, pocket the rest. 4. Drug Deals: Ever seen a queue with no fresh trims? It’s not for the haircuts. NHBF: Clapping the Problem Along The NHBF loves to applaud high street initiatives, ignoring that they’re filling shops with unsustainable businesses or illegal operations. It’s like putting a fresh coat of paint on a crumbling house and pretending it’s fine. Licence to Cut (Not to Exploit) Here’s a thought: instead of opening more shops, why don’t we make sure the ones we have aren’t fronts for crime? Licensing could: • Weed out the dodgy operators. • Raise standards—no more disasters pretending to be professionals. • Stop tax dodgers undercutting honest businesses. Time to Be Honest Barbering should be about skill and community—not laundering cash, exploiting workers, or shady dealings in the backroom. If the NHBF and government don’t step up, the high street risks becoming little more than a façade, where genuine businesses are pushed out by those who don’t play by the rules. Regulation. Licensing. Professionalism. It’s time for change.