Covid-19: Shaftesbury changes lease arrangements for retailers

Leading central London property owner Shaftesbury has initiated discussions with its 800 retail and other tenants over reconfiguring lease agreements that take into account a more challenging climate in central London as a result of Covid-19.

The company owns a significant 15.2 acre portfolio in the centre of London’s West End that includes over 600 shops, restaurant, cafes and pubs who all continue to be massively affected by the lockdown.

This situation was only marginally reflected in the Shaftesbury results – for the six months to 31 March – that showed underlying net property income up by 2.1% to £49.6 million. But the company has used its results statement to announce a reduction in its property valuation of 7.9% to £3.5 billion, and to address changes in lease arrangements.

Brian Bickell, chief executive of Shaftesbury, said: “Although our business performed well during the first four months of the period, the growing impact of the measures to address the pandemic are having a material impact on normal patterns of life and commerce, both for our occupiers and on the near-term prospects for our business and financial performance.”

He confirmed that discussions were underway with retailers and other tenants to “agree tailored solutions on rents and service charges” that included “moving permanently to monthly rents in advance for all commercial tenants from October 2020” compared with the traditional quarterly advance payments. This will form part of a “continuing evolution in structure of leases” at Shaftesbury.

The company has also stated it is to undertake marketing and PR activity, in collaboration with other central London landowners, as it seeks to encourage the return of domestic and international footfall. The West End normally attracts over 200 million visits annually and has a working population of 700,000.