Sir Phillip You Are Wrong
Posted by Mark on 4th Aug 2008
It takes a brave man to say that, especially one who has worked in retail property for 15 years and has a career of at least that long again in front of him, hopefully. I still bare the emotional scars of having done a deal with the then Mr Green over a decade ago when his empire extended merely to Mark One.
To be fair I have only immense respect for the guy, he's an outsider who took on the establishment and won; his modus operandi might be brutal, but it is effective.
And don't get me wrong, as a developer (who learnt his trade at a large retail group) I firmly believe in working in partnership with your occupiers; turnover rents, sure; RPI fixed-uplifts, love them; monthly payments on new lease, not a problem.
What the knighted and ennobled, kings of the High Street do not need is the uncritical, even fawning coverage by financial journalists such as Chris Blackhurst in The Standard, of their proposed wholesale renegotiation of existing leases.
A lease is wholly different from "any other supply agreement", it confers a legal interest in land that enshrines, for both parties, certain inalienable rights.
For every gripe about upward only rent reviews and quarterly in advance payments, I could give you an exciting development that will be stymied by security of tenure provisions under the 54 Act.
Leases are structured to reflect their long term nature which allows both landlord and tenant a secure framework to invest in a location, hopefully to their mutual benefit.
Blackhurst is right, many of the high street heavyweights have scant regard for "supply agreements", reputations have been built on nothing more than knocking 5-10% off your suppliers margin and pushing payment terms out to 60 days. Nice work for your shareholders, pretty disastrous if you are a supplier.
We stick by our agreements with our partners and would expect them to do the same.
Thankfully we don't have a legacy portfolio so it is not a major issue for us. However, if we did, and rent was held back on a point of principle, threatening our business, we would probably serve writs to the homes of all of the directors; it might be brutal, but it would probably be effective.