Many retailers and consumer facing businesses with leasehold portfolios have not paid rent for most periods since March 2020 when the pandemic began. The British Retail Consortium (BRC) reported in May 2021 two-thirds of retailers in the U.K. are at risk of legal action on at least one of their stores, once the ban on evictions and debt collection from commercial tenants is lifted.

With much of the U.K. economy now fully reopened, and government guidance stating rents should be serviced now restrictions have ended, companies are now facing the following three key challenges:

• Significant unpaid historical lease liabilities with a “cliff edge” legal exposure in March 2022 when COVID non-payment protections drop away
• The need to optimise leasehold portfolio to recognise shifting site performance splits, post- pandemic
• Uncertainty over future cash flows given changing portfolio performance mix with a future need to service historical lease liabilities in addition to other financial debts

Companies need to act now to negotiate their COVID lease liabilities with their landlords to bring certainty to strategic decision making, clarity to business capitalisation, and to obtain the best outcome from landlord negotiations that will be required in any event by March 2022.

Find out more about how we can help you extract the best outcome for your business in leasehold discussions through development of plans that will best prepare you for your landlord discussions.

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