When the online retailer of pre-owned luxury goods Xupes decided that they wanted to open their first UK store, there was only one place they wanted to be: the Royal Exchange in London. Brimming with high-end boutiques stocking some of the world’s most exclusive brands, it was the ideal place to base themselves as they expanded from their digital business to launch a bricks-and-mortar site in the heart of the city.
The opportunity
As luck would have it, the company had noticed that a unit would soon be coming up for rent, but the space would need reconfiguring and they would have to move fast to secure it. The current tenant, LK Bennett, was on the verge of insolvency and needed a swift exit.
On the recommendation of Lonic, a specialist real estate agency who had identified the unit as potentially suitable, Martyn Emmens in our commercial property team was appointed to acquire the lease and to complete the deal as soon as practically possible.
The challenges
It was a difficult transaction to manage, but one which we were ultimately able to get over the line thanks to our ability to work quickly and to think outside the box.
As Martyn explains: there were four challenging aspects to this case:
- LK Bennett wished to get out of their lease obligations as soon as they could, as part of their ultimately unsuccessful attempt to stave off their collapse into administration;
- Xupes needed to reduce the size of the unit, which had been expanded over time to include part of an adjoining property owned by a different landlord;
- a new entrance would be required, as by taking the unit back to its original size, the current entrance would be lost; and
- to undertake these works, planning permission and building regulations consent was needed as the Royal Exchange is Grade II listed.
In an ideal world, Xupes would have waited for LK Bennett to leave and then offered to take a new lease subject to the square footage of the unit being reduced and a new entrance way being installed. However this was not an option as LK Bennett needed to effect a surrender of their lease as soon as they could, and the only basis on which the landlord was prepared to proceed was if Xupes took a lease from the date on which the surrender occurred so that there was no break in occupation.
The solution
Martyn came up with a creative way of structuring the deal which enabled the lease to be completed before the works to reconfigure the space had been carried out, but which also ensured Xupes got what they needed without exposing them to any unnecessary risk or additional cost.
As if this was not enough of a challenge, he needed to get everything signed off within an extremely tight timescale while dealing with an offshore landlord based in the British Virgin Islands.
‘It was a highly pressured situation’, says Martyn, ‘but one which we were able to manage effectively by working collaboratively with the landlord’s UK based solicitors, Farrer & Co. We negotiated lease terms which obliged the landlord to obtain the consents needed for the erection of a partition wall and the construction of the entrance way and which provided for Xupes to benefit from an extended rent free period while the works were being carried out.’
The end result is that the client was able to achieve their objective to secure a flagship London store in a prime location on commercially attractive terms and which is due to open its doors for business imminently.
Need our help?
If you are a commercial landlord or tenant who needs help to get a lease deal over the line, why not give Martyn a call on 020 7845 7435 to see if he can assist?
Martyn undertakes a variety of property work with an emphasis on high-value lease transactions, the acquisition and disposal of commercial and residential property investments and the acquisition, promotion and onward sale of development land.
You can also speak to Martyn’s colleague, solicitor Chloe Wilson, who assisted him on the Xupes case.