- What Blackstone and Telereal have created a tenants’ charter for the occupiers of their £1.5bn Arches portfolio
- Why The sale had created controversy due to the low rents maintained by the previous owner, Network Rail, and concerns over the sustainability of small business occupiers if rents rise
- What next Tenants will be provided with new services including a 24/7 contact centre, dedicated property managers and extra clarity over rent reviews
Blackstone and Telereal have created a tenants’ charter for the occupiers of their controversial £1.5bn Arches portfolio.
The move is designed to bring the landlords and tenants closer together after protests over the sale of the portfolio previously owned by Network Rail due to concerns over prospective rent rises that could be unsustainable for small business.
Blackstone and Telereal have spent the last few months in talks with the Federation of Small Businesses, Guardians of the Arches, the lobbying group against the proposed sale, and tenants in order to create the charter, which is being sent out to occupiers today.
As well as creating a new 24/7 helpline and undertaking an investment programme to address maintenance issues, Blackstone and Telereal have increased the number of site managers across the estate by 15% so all tenants have an on-site property manager and has brought 360 unoccupied arches back into use, a number that is due to rise to 600 in due course.
The letter said that the process is “the beginning of a new culture at a new company, The Arch Company, one of respect, responsiveness and transparency with each other and with our tenants”.
As well as a plethora of promises on investment into the estate, the charter also outlines the new landlords’ commitments on a number of controversial issues surrounding rents and leases, security of tenure and credit control.
The charter says that the landlords “want to provide spaces and a service that supports your businesses, whilst also achieving market rents through a clear and transparent rent review and lease renewal process” and that they will outline the rent review and lease renewal process “in clear simple language” in an updated handbook.
Resistance to rising rents
It also goes on to say that “We know that some tenants might have affordability issues. In these specific cases, we are committing to work with long-standing small businesses, including not-for-profits, on an individual basis to agree suitable rent profiles. These are businesses that have occupied Arch Company properties for 10 years or more; over 1,400, more than 40%, of our tenants are long-standing businesses”.
In order to enhance sustainability of businesses it may look to introduce stepped rent increases, turnover leases or support arch relocation.
Security of tenure has been a particularly hot topic surrounding the portfolio, with the Arches portfolio sold on the basis that any new leases issued will not fall under the 1954 Landlord and Tenant Act, which requires landlords to give tenants the right, in most circumstances, to stay in their premises when their lease ends, which the landlords said was in order to “provide appropriate availability of access and recovery for any necessary railway works”.
They are now actively encouraging tenants to seek professional advice in relation to a transition to a new lease without protection under the act.
In regards to late or non-payment of rent Blackstone and Telereal have said that they will “have a clear process to proactively and constructively engage with tenants if they are in payment arrears” and that bailiff action will only be undertaken if this process has not succeeded and that they have put in place a new system to formally track all credit control correspondence.
“Preserving a diverse mix of businesses”
Adam Dakin, director of The Arch Company, said: “Our Tenants’ Charter is our public commitment to engage with all of our tenants and communities in an open and responsive manner. It sets out how we will address our tenants’ priorities in practice, make the arches better places to build, grow and run businesses and above all preserve the diverse and independent mix of businesses that make the arches so unique.
“The Charter is the product of many months of constructive dialogue with key stakeholders including the Federation of Small Businesses, Guardians of the Arches and most importantly, our tenants. We are particularly grateful to members of Guardians of the Arches, led by Leni Jones, for taking the time to step away from the day-to-day running of their businesses to engage with us. Our meetings and conversations over the past six months have been open and constructive and their feedback has been invaluable in shaping the Charter we are releasing today.”
Mike Cherry, national chairman at the Federation of Small Businesses, said: “FSB has appreciated working with The Arch Company since it took over responsibility for the arches and became the UK’s largest small business landlord.
“Today’s Tenants’ Charter includes important commitments on areas we have been keen to see – improved communications and responsiveness through the 24-7 contact centre and dedicated property manager, affordability and clarity at the heart of proposed rent reviews, and bringing potential new workspaces for business incubators. This is welcome at a time when financial pressure is mounting on small businesses across the UK.”