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Rent Reviews - Watch for sneaky tricks

  • 21-01-2011 9:06am
    #1
    91011
    Closed Accounts Posts: 1,383 ✭✭✭


    I cam across this recently talking to a friend who has some stores and got hit by a massive rent hike based on the fact a new tenant was paying the same rent, he can't understand how the ne tenant can pay such a rent. - I know the new tenant and found out the deal they got which paints a totally different story.

    The new tenant has a new lease wich allows for rent to be reduced upon review and whilst the first 5 years "headline" rent is circa €200,000, they conviently forget to say that the entire fit out was paid for, down to the shelves and till system and a 12 month rent review was agreed and a 33% rent rebate in year 2, followed by 20% in year 3

    So whilst the landlord will claim a letting at €200,000 in reality over the 5 years, the total rent paid will be less than €600,000 when you include value of shopfit, rent free & rebates - an average of €120,000 per year.

    Then after 5 years, the rent can be reduced from the €200,000 headline rate.

    And we'll wonder why more and more retailers go to the wall??


Comments

  • #2
    gavney1
    Closed Accounts Posts: 537 ✭✭✭gavney1


    that is very sneaky indeed.

    At same time, i'm sure there's examples from the past of retailers "fudging" their sales figures to make things look worse than they are.
    But at the moment, things are so bad that the truth is probably worse than any fiction!


  • #3
    91011
    Closed Accounts Posts: 1,383 ✭✭✭91011


    gavney1 wrote: »
    that is very sneaky indeed.

    At same time, i'm sure there's examples from the past of retailers "fudging" their sales figures to make things look worse than they are.
    But at the moment, things are so bad that the truth is probably worse than any fiction!

    landlords have no interest in sales figures, shops are reviewed based on use and "open market rent" as an empty unit, hence sales figures have no bearing on it except where turnover rents are concerned.

    Its the "open market rent" that is being cheated on.


  • #4
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,815 ✭✭✭antoinolachtnai


    This is why it is important for the tenant to get proper advice in relation to contentious rent reviews.


  • #5
    byrne0f56789
    Closed Accounts Posts: 201 ✭✭byrne0f56789


    Retailers are getting hammered. It's sad to see. However, I believe that Landlords are shooting themselves in the foot.


  • #6
    gavney1
    Closed Accounts Posts: 537 ✭✭✭gavney1


    91011 wrote: »
    landlords have no interest in sales figures, shops are reviewed based on use and "open market rent" as an empty unit, hence sales figures have no bearing on it except where turnover rents are concerned.

    Its the "open market rent" that is being cheated on.

    Well, we went to arbitration over a rent review just before Christmas for one of our stores.

    The Sales Figures were actually the major issue, and less so the "open market rent". Of course the landlord pushes the issues of open market rent, but when there's no actual demand for the unit, then open market rent is less relevant.

    There was no evidence that any other retailer wanted to take the unit from us, so fortunately the issue of Sales Figures became the more important issue from the arbitrators point of view. So, we came out of the arbitration the (slightly) happier of the two parties.


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