What does a licensed property advisor do when all the restaurant and pub deals dry up
The forced lockdowns have resulted in many hospitality businesses running out of cash and needing to restructure via a pre pack admin or CVA in order to survive, which has given operators the opportunity to hand back their unprofitable / unwanted sites that they would have previously used an property agent to sell. 19th March 2020 AG&G had 250 corporate restaurants to sell. 20th March 2020 (when pubs and restaurants were forced to close), AG&G’s list of licensed property instructions evaporated. So what has been keeping us so busy during the past year?
Through being a service provider exclusively to the hospitality sector for over 20 years, we have shared the pain and disruption, just like our clients. But rather than just sit and wait for normal times to resume, or perhaps learn a new language or yoga, the team of AG&G have been kept extremely busy in an area almost unknown before the onset of Covid, the area of lease restructuring and emergency rent reviews.
One of the many government rules to arise during these unprecedented times has been a moratorium against evictions of commercial lease tenants for the non-payment of rent. Operators duly went into survival mode needing to preserve cash. Overnight an impasse was created whereby tenants ceased paying rents and landlords were forced to wait. Neither party felt particularly comfortable, with tenants believing hefty rental demands could lie at the end of the moratorium; the landlords on the other hand were worried that new legislation would be introduced to wipe off some or all the outstanding rental debts. Businesses and jobs were under threat as a result.
As property advisors understanding the financial pressures on operators, we were well placed to mediate between landlords and tenants. An opportunity therefore arose for AG&G to step in, represent some of our operator tenant clients, and seek an empathetic way forward for all parties, in a cooperative fashion, on the premise that a negotiated solution would surely be a better option than leaving it up to government to decide. The overriding goal being to protect tenancies for the benefit of both landlord and tenant.
Accordingly, for almost a year now, AG&G have been poring over the terms of literally hundreds of leasehold agreements; evaluating existing rents which were in place pre-Covid; considering the accruals of rental debts that had ensued; and having literally thousands of telephone conversations and Teams meetings with an array of landlords, from blue-chip institutions to private investors and pension holders, in order to limit the damage the pandemic has had upon both parties.
Our specialist skills have been recognised and utilised by a number of corporate operators in the hospitality sector including the likes of Cote; Azzurri; Greene King; ETM; Gaucho; Prezzo; Burger King; Richoux; Giggling Squid; Wagamama; Big Plate; Loch Fyne; and State of Play Hospitality. These and other tenants have brought us in to provide specialist advice by experienced Chartered Surveyors, each of whom has lived and breathed in the sector throughout their careers.
There have been no winners – Covid has seen to that – but our involvement helped to protect over 750 businesses whilst providing confidence to landlords that their investments will remain viable once lockdown concludes. Through being at the forefront of the restructuring market during these unprecedented times, it is estimated that AG&G have contributed towards the preservation of over 9,000 jobs through the forgiveness of over £25 million of rental payments.
We now look forward to the reopening of the hospitality sector over the coming weeks and months with visits planned to eat and drink at many of the venues which would have faced closure without the collaborative approach adopted by both landlord and tenant over the past 12 months.