Leasehold Liabilities

The past five years has seen the emergence of a market whereby corporates holding surplus, non operational property, usually on a leasehold basis, can package the portfolio and transfer this to a third party (who we shall call the purchaser) for a reverse premium, in return for which the third party will take on the liabilities and manage these through.

In the public sector, the PRIME portfolio (with which King Sturge were involved) and STEPS portfolio, have led the way for combined freehold and leasehold liability transfers to the private sector.

One of the earliest private sector transactions was the Columbus portfolio of Abbey National properties, acquired by Mapeley in 2000. This was combined leasehold and freehold portfolio, with approximately £500 million of freehold assets, alongside 900 leasehold office and retail premises.

Since then, BT pursued a similar substantial freehold and leasehold portfolio in 2001 and this has been followed by the Liberty 1 & 2 portfolios, sold by RBS, in relation to which King Sturge have advised the purchaser, Ackerman.

Since then, leasehold-only transactions, utilising the legal processes developed for the above transactions, have started to take effect, with the first major deal being a portfolio transferred by Rentokil to Sparklestone in 2006.

The Corporate Real Estate team at King Sturge have advised buyers and sellers of such portfolios and are actively progressing various such instructions at present.