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Putting an Offer In

Discussion in 'General Business Forum' started by locutus, Sep 4, 2020.

  1. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,861 2,465
    Whilst the big chains are seeming to have the landlords over the barrel at this time, no doubt it will come back to haunt them in the future as landlords will find away to safeguard their lease terms, probably with some form of insurance that the lease will be paid in full at more cost to the leaser at the start of the lease

    It's surprising how fast somewhat sleepy businesses can change when their livelihood is at stake
     
    Posted: Sep 15, 2020 at 9:30 AM By: Chris Ashdown Member since: Dec 7, 2003
    #21
  2. Financial-Modeller

    Financial-Modeller UKBF Enthusiast Full Member

    782 272
    Another aspect that may not have been mentioned already is that if the owner has borrowed against the asset, there may be lending covenants, including Loan-to-Value, and debt cover ratios.

    In this case, even if the landlord wanted to accept a low offer, they would immediately breach the conditions of the loan, requiring refinancing one way or another, which is something that they will want to avoid at this point.
     
    Posted: Sep 15, 2020 at 10:29 AM By: Financial-Modeller Member since: Jul 3, 2012
    #22
  3. MY OFFICE IN CHINA

    MY OFFICE IN CHINA UKBF Legend Full Member

    5,605 1,317
    If you think they'll not achieve their valued asking rent (£50k +), submit an offer for the following:

    A 3 months license (at 'your' rent), renewable every 3 months, with a 4 week notice period that the landlord can give you to vacate.

    This will be ideal for the landlord (in most cases).

    It's unlikely that the landlord will achieve the full asking price in the next 1-2 years.

    If you don't ask . . . . . .
     
    Posted: Sep 16, 2020 at 10:29 AM By: MY OFFICE IN CHINA Member since: Nov 16, 2011
    #23
  4. locutus

    locutus UKBF Regular Free Member

    167 4
    @MY OFFICE IN CHINA

    That is a good idea, however, I plan to spend a bit of money to get the shop up to a standard I need.

    It needs flooring, electrics, water, toilets, etc. It's one grade above barren the shop. But if I were to just make it a normal shop, it wouldn't be that expensive to do. Just redo the walls, and floors, but some units in, and that's it.

    The shop next to mine has been empty for a year, and it's nothing but a shell, no floor, no walls, no ceiling, etc. I thought it might be suitable for me, but requires so much work to do.

    I have a meeting with the agents tomorrow, and we're going to discuss the above shop. They seem more willing to negotiate.
     
    Posted: Sep 16, 2020 at 11:15 AM By: locutus Member since: Jun 12, 2015
    #24
  5. MY OFFICE IN CHINA

    MY OFFICE IN CHINA UKBF Legend Full Member

    5,605 1,317
    Given the above shop condition, you can probably negotiate a one year free period on a 3 year lease. That reduces 'their' rent by a third, which is still too much for you.

    Do you need the whole shop? Can you partition and let half (with landlord's permission)?

    Next 12 months will be (very) difficult for B&M shops.

    Maybe start with a smaller shop that's within your rent 'comfort zone', then expand after 2 years.

    That's the prudent thing to do. (If you are convinced you need a B&M shop).

    In any event, good luck.
     
    Posted: Sep 16, 2020 at 11:25 AM By: MY OFFICE IN CHINA Member since: Nov 16, 2011
    #25
  6. locutus

    locutus UKBF Regular Free Member

    167 4
    I really need the whole shop. The reason I want that shop is because I know we can do what we are/were doing, better. The potential shop, as it is, has slightly less floor space than the current shop. We can make more money from that place, than the current place.

    But there is a smaller shop near me, a vape shop that opened up in January/February, that can work for me - it's part of a small chain. They just spent a bit of money refurbishing the store - they did it quite well, and I wouldn't have to do a lot to bring it up to my standard. The reason I mention the vape shop is because since they opened, they didn't have many customers, and since Covid, they have less customers, and don't seem to be open much. There are too many vape shops in town.

    However, I really like that shop that we've been talking about. So much potential. I will chase up in a few days and see if they have changed their mind (which I doubt), now they know it was a "serious offer". I would imagine I'm being a borderline nuisance to the agent.

    I don't understand B&M I'm afraid.
     
    Posted: Sep 16, 2020 at 11:40 AM By: locutus Member since: Jun 12, 2015
    #26
  7. MY OFFICE IN CHINA

    MY OFFICE IN CHINA UKBF Legend Full Member

    5,605 1,317
    Bricks & Mortar
     
    Posted: Sep 16, 2020 at 11:45 AM By: MY OFFICE IN CHINA Member since: Nov 16, 2011
    #27
  8. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,861 2,465
    Do not underestimate the high costs of changing a empty shell into a shop and the costs will be very high, and dont think of it as a asset as you cannot take it with you at the end of the lease or sell it back to the landlord
     
    Posted: Sep 17, 2020 at 8:26 AM By: Chris Ashdown Member since: Dec 7, 2003
    #28