In the wake of COVID-19, Landlords and Tenants are looking for innovative ways to help businesses catch up with rent arrears, keep lights on in premises and give a boost to the wider retail market. Could a move to turnover rent-based leases be the answer?
Turnover rent-based leases are no new phenomenon, but the change in the retail market caused by Covid-19 and the challenges that recovery poses have caused a shift in the prevailing practice, where, increasingly, turnover leases are being looked to as providing a working solution to help keep the lights on and businesses trading in premises.
Beyond the mechanics of how a turnover lease will function (i.e. turnover inclusions/exclusions, the quantification and payment of the turnover rent itself), there are many other important points for parties to consider at Heads of Terms stage for the smooth running of the lease once operational. For example, do the parties agree that the lease will contain a keep open to help the Landlord maximise the rent payable? If so, what exclusions will the Tenant require from this for the essential running of their business? Deemed turnover provisions for unauthorised closures, late certification payments, confidentiality and alienation are also important issues for both Landlords and Tenants when putting a turnover lease in place.
Our upcoming Brodies Academy seminar will focus on these considerations and more, as our speakers Naomi Duffy-Welsh and Matthew Bruce provide a walkthrough of style wording commonly found in turnover leases and the key points to consider for Landlords and Tenants at each stage. By presenting on some of the style clauses themselves, our speakers will help demonstrate how agreed terms transpose to the end lease itself and, in doing so, act as a helpful reminder of the matters solicitors commonly seek instruction on. The understanding of the key turnover provisions that they will deliver will help ensure the key terms can be bottomed out in the initial stages to speed up the lease transaction.
As always, our speakers will be happy to answer any questions during the seminar, so please feel free to email our speakers with any questions you might have ahead of the session for answer on the day.
For more information on the session please see our dedicated Brodies Academy page and we look forward to you joining us on the day.