F&C REIT owned two of the largest lease liabilities in the portfolio (Dunstable and Glasgow). They intended to develop the site into a residential community but Wolseley also occupied a trade warehouse on the site.
Based on the forecast recovery of each property, by sub-letting, the client had made a provision of £3.6m for the Dunstable and Glasgow properties.
FraserCRE submitted offers on behalf of its client to surrender both leases based on their provision, while simultaneously exploring sub-letting opportunities.
The landlord agreed to the combined surrender of the Dunstable and Glasgow properties. This also included a contingent side arrangement with Wolseley to exit the operational site prior to its existing lease expiration. The client paid £2.35m to F&C REIT for the surrender of both leases and agreed to contribute towards Wolseley's move and fit out costs. This made a total saving of over £800k, removing over 15% of future sub-tenant income exposure in the portfolio.
The success of this transaction has allowed us to focus on our core operational objectives and ensured that the needs of the branch network are fully supported. It has been delivered to the highest standard whilst ensuring that Wolseley's professional integrity has not been compromised. We are delighted with the result.Andrew Pickett