Big UK property manager introduces flexible model for retail rents
UK financial services group Legal & General has launched a commercial leasing framework for retail & leisure tenants, called the flexible partnerships model, which focuses initially on turnover rent options.
Legal & General Investment Management manages £1.2 trillion of assets, including £35 billion by its real estate division, LGIM Real Assets.
LGIM Real Assets retail & futuring head Denz Ibrahim explained the model last week:
“With structural changes impacting the retail & leisure sectors in recent years, predominantly due to the rise of e-commerce & rapidly changing consumer expectations, the traditional leasing model & the 1954 Landlord & Tenant Act is no longer fit for purpose for many occupiers.
“Over the past 5 years, retail business launches & failures have increased by 29%, and in 2019 the average length of a new retail lease had fallen to under 5 years. Historically, landlords have taken a ‘one size fits all’ approach, which in today’s fast-paced & evolving leisure & retail sectors is no longer fit for purpose.”
The 4 core packages:
Flexi: aimed at start-ups for 3-36 months
Operational: turnover deal with an owner break linked to performance, with mid-term leases of 3-5 years
Flagship: traditional lease on a longer term of 5+ years
Flexi flagship: Operators L&G wants to partner with but which need longer-term security
Legal & General, 30 July 2020: Legal & General puts occupiers first with new flexible leasing model for retail and leisure