Q4 of 2016 saw lots of landmark shopping centres change hands, often to foreign owned investment funds or pension funds. New owners appoint new asset management teams. The new shopping centre managers often inherit a portfolio of problems from predecessors, largely because of deals cut with tenants during the crash to keep the unit occupied. The newly appointed managers are eager to make a mark. Improve cash flow, reduce bad debts and get covenant quality right. Key improvements in today's' economic landscape arise from improving tenant quality. Asset values improve as does cash flow. Newly appointed property managers analyse which tenants are not paying the reserved rent, or are not paying on time and then attempt to address it with action. The property manager then instructs a solicitor. The solicitor invariably advises them to serve a warning and then start Circuit Court proceedings to eject a tenant with say €200,000 in rent arrears. Fast forward 2 years, €50,000 in legal costs and now a €400,000 arrears situation with zero scope of recovery due to the tenant's compounded financial woes. That's the orthodox route but a foolish route for a savvy and results orientated property manager. In those situations we advise our property manager clients to: warn then re-enter. Every commercial lease has a forfeiture proviso which a allows a landlord to re-enter on a premises and so terminate the lease if rent is unpaid for 7 days. I believe that most solicitors do not advise their clients of this simple, contract based right which is quick and not costly is precisely because it is not costly and it is quick. For further information contact the property dispute resolution team at Leman Solicitors for practical clear advice.
Two more Irish shopping centres have been acquired by US investment groups. Davidson Kempner has purchased a majority stake in Navan Town Centre in Co Meath for about €62 million, while Oaktree has been the top bidder at €12 million-plus for the Fairgreen Shopping Centre in Mullingar, Co Westmeath. Joint selling agents Cushman & Wakefield and Savills expect the Navan investment to show a net yield of 7.31 per cent, while Mullingar is due to produce a return of 8.13 per cent on the net operating income. Loans underpinning both shopping centres were bought by CarVal when the market crashed.