Service: Lease Consultancy | Sector: London Offices | Contacts: Graham Foster, Tony Guthrie
A client, who had sub-let the entirety of a building on which it held the head lease. It already faced a rental obligation that exceeded the rents it received from sub-tenants – despite the property being fully sublet – and we were appointed to act on the various rents reviews to mitigate this deficit.
Early in the process we identified that the client had a break clause that was in practice inoperable, and varying that break clause became the primary objective. We vigorously contested the head lease rent review, while making it clear to the landlord our commitment to a favourable outcome and willingness to go to arbitration if necessary. Late in the process we introduced the alternative of varying the lease to make the break clause operable, in exchange for settling the rent review, which was accepted. Sub-lease rent reviews were only settled after the head lease dispute had been resolved.
The settling of the head lease at an acceptable level, and securing the ability for the client to exercise its break clause, was a very material gain. In addition, the settlements with the sub-tenants have been higher than anticipated, reducing shortfall in rent which, due to the break clause, will now only run for a limited period.