Menu
Estates Gazette
Eureka
14/March/2014
After resigning from the partnership (? please read my first blog), for a while I rented a room from my ex-partners but, finding them nosy, I served notice, much their annoyance at loss of revenue, and relocated to renting a small self-contained office building in South Harrow which in keeping with delusions of grandeur I named “Lever House’.
On my own, with a part-time secretary, I started with the management of a parade of shops in Acton, London W3, the rent reviews of some industrial premises in Park Royal, and a few other instructions. I was trading as Fineman Lever & Co which led to special dispensation from the Registrar of Business Names because there were four different businesses all with that name: my father’s business in Acton, his original partner’s Central London office which by then was separate to my father’s and managed property for Dorrington Investments, the business of my ex-partners, and mine. Having the same name particularly in the Harrow area was causing confusion amongst clients and well-wishers so my assistant, whom I’d taken on to handle agency instructions, came up with the idea of Lever Commercial. I don’t think I was the first to add “Commercial’ to a trading name but the publicity I was generating as a consequence of my next decision certainly inspired dozens of agents and surveyors throughout the UK to tag ‘Commercial’ to their business names.
The decision that changed the course of my career history, and led to helping to create what has since become a vast industry for surveyors and lawyers, happened later on in 1975 after I’d been to an industry conference about rent review. One of the speakers, an eminent solicitor, said that the cause of problems at rent review was lack of communication between lawyers and surveyors in the drafting of leases. Spotting a gap in the market, I decided to specialise in rent review and lease renewal and promptly announced my services to the market.
For a while I had the field to myself. In those days, it was contrary to RICS rules for chartered surveyors to promote themselves as ‘specialists’ but soon after my publicity machine got going the RICS relaxed its rules whereupon chartered surveyors flooded the market themselves also claiming to be rent review specialists.
How to stand out from the crowd is all about marketing. Never one for mixing business with pleasure, I rely on different ways of attracting and retaining clients for my services. Unlike those people that find it easier to talk, I find it easier to write. Unlike those that prefer to copy, I find it easier to originate. Writing was the obvious route, but writing is only half the fun, the challenge is what to say.
My newsletter came about in consequence of writing so many letters to the Estates Gazette and other leading journals that hardly a week elapsed before another of my missives was published. Also, a surveyor-friend had asked me to suggest a topic he could write about so that if his letter were published in the EG then his bosses and colleagues would praise him. My suggestion of a topic that I was saving for my future use led to him getting an EG editorial on the same theme as well, he was delighted but of course I’d missed out. My having won an acknowledgement for initiating the longest-running correspondence in the Estate Gazette on a single subject, namely overage and non-standard rent-review intervals, and having been mentioned in a Blundell Memorial Lecture and as footnote in two law books, and what with publishing booklets of my own, including ‘Framework of Rent Review Clauses”, “How to do a Rent Review”, “How to Read an Auction Catalogue” and “Investment in Secondary Shops”, I concluded it might be better to publish my own newsletter in which I could say whatever I liked and to whom rather than risk censorship by the establishment or compete for editorial space.
In 1984, I launched a newsletter entitled Quarterly Commentary, which I subsequently renamed Current Review, and more recently Rent Review Matters. Rather than just a puff to be read and discarded, I wanted the content to be read and kept. In those days, I was in my spare time involved in the ‘mind-body-spirit’ New Age movement, having discovered I was a gifted healer and adept at relationship counselling. To be part of the ‘Green’ movement, I created Marketing Yourself, a business development philosophy for self-employed practitioners and therapists in the complementary and alternative health-care market; many of the people I helped have since become leading lights in their fields. Sensing the concepts of personal development as applied to business would become more mainstream if presented in a tangible pragmatic way, I incorporated a great deal of comment and advice in my newsletter for clients and contacts.
After a while, I dropped Lever Commercial in favour of Michael Lever. It’s easy for me to be myself. Fast-forward to the present, it is getting on for 40 years since I pioneered specialising in rent review and lease renewal. The market for my services has matured and evolved. Nowadays, it’s not only surveyors that deal with rent review, but also lawyers and accountants; and increasingly landlords and tenants are doing it themselves. It doesn’t help that the market is polarising between rent reviews that are worth doing so far as the landlord or tenant is concerned, and those reviews that are non-starters. A trend towards shorter leases is leading a reduction in rent review but an increase in tenancy expiry and renewal, even though to have a longer lease with break clause is often cheaper for the parties.
Anyone with money can buy a commercial property, but successful investment in commercial property requires a different mind-set. Activity in the investment market does not necessarily rub off on rental growth. Property is a depreciating asset. With costs and stamp duty, the moment you buy a property it goes down in value. Capital appreciation may come from blips in yield and/or confidence compression, but for greater certainty of performance, particularly for long-term pension planning, capital appreciation is best derived from rental growth. Rental growth is a product of judicious choice, shrewd management, a feel for tenant-dynamics, and a deep understanding of business tenancy law and rental valuation.
Successful investment is also about timing. The best time to buy is when there’s no money about, the worst time when credit is easy to come by. However, a paradox of market momentum is that the better properties are more likely to come up for sale when prices are high, which means the investor has to weigh up the likelihood of over-paying against the potential for further growth.
It is said that surveyors that deal with rent review have a greater understanding of business tenancy law and rental valuation than most. I also have an unusually good understanding of retailing as well as property. Over the course of this on-going blog, I shall explain how that understanding can be used to maintain and enhance the value of commercial property so that landlords can enjoy long-term consistent success, without coming unstuck in times of change.
As I say on my website, http://www.michaellever.co.uk, rent review is at the heart of commercial property.
I look forward to helping you in some way.
On my own, with a part-time secretary, I started with the management of a parade of shops in Acton, London W3, the rent reviews of some industrial premises in Park Royal, and a few other instructions. I was trading as Fineman Lever & Co which led to special dispensation from the Registrar of Business Names because there were four different businesses all with that name: my father’s business in Acton, his original partner’s Central London office which by then was separate to my father’s and managed property for Dorrington Investments, the business of my ex-partners, and mine. Having the same name particularly in the Harrow area was causing confusion amongst clients and well-wishers so my assistant, whom I’d taken on to handle agency instructions, came up with the idea of Lever Commercial. I don’t think I was the first to add “Commercial’ to a trading name but the publicity I was generating as a consequence of my next decision certainly inspired dozens of agents and surveyors throughout the UK to tag ‘Commercial’ to their business names.
The decision that changed the course of my career history, and led to helping to create what has since become a vast industry for surveyors and lawyers, happened later on in 1975 after I’d been to an industry conference about rent review. One of the speakers, an eminent solicitor, said that the cause of problems at rent review was lack of communication between lawyers and surveyors in the drafting of leases. Spotting a gap in the market, I decided to specialise in rent review and lease renewal and promptly announced my services to the market.
For a while I had the field to myself. In those days, it was contrary to RICS rules for chartered surveyors to promote themselves as ‘specialists’ but soon after my publicity machine got going the RICS relaxed its rules whereupon chartered surveyors flooded the market themselves also claiming to be rent review specialists.
How to stand out from the crowd is all about marketing. Never one for mixing business with pleasure, I rely on different ways of attracting and retaining clients for my services. Unlike those people that find it easier to talk, I find it easier to write. Unlike those that prefer to copy, I find it easier to originate. Writing was the obvious route, but writing is only half the fun, the challenge is what to say.
My newsletter came about in consequence of writing so many letters to the Estates Gazette and other leading journals that hardly a week elapsed before another of my missives was published. Also, a surveyor-friend had asked me to suggest a topic he could write about so that if his letter were published in the EG then his bosses and colleagues would praise him. My suggestion of a topic that I was saving for my future use led to him getting an EG editorial on the same theme as well, he was delighted but of course I’d missed out. My having won an acknowledgement for initiating the longest-running correspondence in the Estate Gazette on a single subject, namely overage and non-standard rent-review intervals, and having been mentioned in a Blundell Memorial Lecture and as footnote in two law books, and what with publishing booklets of my own, including ‘Framework of Rent Review Clauses”, “How to do a Rent Review”, “How to Read an Auction Catalogue” and “Investment in Secondary Shops”, I concluded it might be better to publish my own newsletter in which I could say whatever I liked and to whom rather than risk censorship by the establishment or compete for editorial space.
In 1984, I launched a newsletter entitled Quarterly Commentary, which I subsequently renamed Current Review, and more recently Rent Review Matters. Rather than just a puff to be read and discarded, I wanted the content to be read and kept. In those days, I was in my spare time involved in the ‘mind-body-spirit’ New Age movement, having discovered I was a gifted healer and adept at relationship counselling. To be part of the ‘Green’ movement, I created Marketing Yourself, a business development philosophy for self-employed practitioners and therapists in the complementary and alternative health-care market; many of the people I helped have since become leading lights in their fields. Sensing the concepts of personal development as applied to business would become more mainstream if presented in a tangible pragmatic way, I incorporated a great deal of comment and advice in my newsletter for clients and contacts.
After a while, I dropped Lever Commercial in favour of Michael Lever. It’s easy for me to be myself. Fast-forward to the present, it is getting on for 40 years since I pioneered specialising in rent review and lease renewal. The market for my services has matured and evolved. Nowadays, it’s not only surveyors that deal with rent review, but also lawyers and accountants; and increasingly landlords and tenants are doing it themselves. It doesn’t help that the market is polarising between rent reviews that are worth doing so far as the landlord or tenant is concerned, and those reviews that are non-starters. A trend towards shorter leases is leading a reduction in rent review but an increase in tenancy expiry and renewal, even though to have a longer lease with break clause is often cheaper for the parties.
Anyone with money can buy a commercial property, but successful investment in commercial property requires a different mind-set. Activity in the investment market does not necessarily rub off on rental growth. Property is a depreciating asset. With costs and stamp duty, the moment you buy a property it goes down in value. Capital appreciation may come from blips in yield and/or confidence compression, but for greater certainty of performance, particularly for long-term pension planning, capital appreciation is best derived from rental growth. Rental growth is a product of judicious choice, shrewd management, a feel for tenant-dynamics, and a deep understanding of business tenancy law and rental valuation.
Successful investment is also about timing. The best time to buy is when there’s no money about, the worst time when credit is easy to come by. However, a paradox of market momentum is that the better properties are more likely to come up for sale when prices are high, which means the investor has to weigh up the likelihood of over-paying against the potential for further growth.
It is said that surveyors that deal with rent review have a greater understanding of business tenancy law and rental valuation than most. I also have an unusually good understanding of retailing as well as property. Over the course of this on-going blog, I shall explain how that understanding can be used to maintain and enhance the value of commercial property so that landlords can enjoy long-term consistent success, without coming unstuck in times of change.
As I say on my website, http://www.michaellever.co.uk, rent review is at the heart of commercial property.
I look forward to helping you in some way.
Pre-pack Administration
01/March/2009
My letter published in Estates Gazette, March 2009:
"Whilst I agree with Anthony Ratcliffe there seems precious little difference between “phoenix” company and “pre-packs”, I do think landlords could do both themselves and the shop property sector a service by adopting a more robust approach to requests for assignment.
Generally, alienation criteria in a lease enable a landlord to require a director surety or guarantor as a pre-requisite for consent for assignment. Generally, multiple retailers are unwilling to provide personal guarantors but, since the pre-pack company is effectively a new business with no trading record, there is no reason to treat it any differently.
In my opinion, landlords are being presented with a rare possibly unique opportunity to influence the future of retailing and the structure of property costs in the UK. By refusing consent to assign to a pre-pack unless personal guarantor(s) are provided, multiple retailers are less likely to embark upon debt-fuelled jamborees, if their own personal money were on the line. One reason there is now a legacy of high rents in most places is not a consequence of supply and demand, so much as the knock-on effect of rental evidence caused overambitious egocentric retailers living off borrowings and overpaying for new lettings with no thought for the long-term wider consequences.
Increasingly, I am taking the view that comparable evidence at rent review involving a transaction where the lease is to a company without a personal guarantor should be treated with the utmost caution, because the rent is likely to be higher.
In my opinion, multiple retailers allowing branches to under-perform, such that they have to be ditched using pre-packaged practices, is tantamount to gross incompetence at the highest level. It is also a poor reflection on the investment acumen of innumerable landlords in allowing multiple retailers to be exempt or shielded from the strictures of tenancy management that are automatically applied to small businesses."
"Whilst I agree with Anthony Ratcliffe there seems precious little difference between “phoenix” company and “pre-packs”, I do think landlords could do both themselves and the shop property sector a service by adopting a more robust approach to requests for assignment.
Generally, alienation criteria in a lease enable a landlord to require a director surety or guarantor as a pre-requisite for consent for assignment. Generally, multiple retailers are unwilling to provide personal guarantors but, since the pre-pack company is effectively a new business with no trading record, there is no reason to treat it any differently.
In my opinion, landlords are being presented with a rare possibly unique opportunity to influence the future of retailing and the structure of property costs in the UK. By refusing consent to assign to a pre-pack unless personal guarantor(s) are provided, multiple retailers are less likely to embark upon debt-fuelled jamborees, if their own personal money were on the line. One reason there is now a legacy of high rents in most places is not a consequence of supply and demand, so much as the knock-on effect of rental evidence caused overambitious egocentric retailers living off borrowings and overpaying for new lettings with no thought for the long-term wider consequences.
Increasingly, I am taking the view that comparable evidence at rent review involving a transaction where the lease is to a company without a personal guarantor should be treated with the utmost caution, because the rent is likely to be higher.
In my opinion, multiple retailers allowing branches to under-perform, such that they have to be ditched using pre-packaged practices, is tantamount to gross incompetence at the highest level. It is also a poor reflection on the investment acumen of innumerable landlords in allowing multiple retailers to be exempt or shielded from the strictures of tenancy management that are automatically applied to small businesses."