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Real estate sector struggles may offer opportunities

Oliver Haunch Oliver Haunch

The inability of landlords to enforce their rights to collect rent and service charges, throughout the pandemic, has resulted in challenges for the real estate sector. Yet, as the economy re-opens, Oliver Haunch foresees new opportunities in this space.

We’ve worked with numerous real estate businesses and their stakeholders through lockdown, as rent recoveries have plummeted and arrears have grown. Discover how we've helped optimise value for stakeholders in the sector through 2020, and what we can do for you in 2021.

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The state of the real estate sector

The impact of the last 12 months has been felt across the real estate space, but especially by landlords with premises utilised in the most-affected sectors, such as retail, hospitality and leisure, and travel and tourism.

Measures designed to shelter businesses from the worst impacts of lockdown have severely restricted the ability of landlords to take action against tenants to recover rent and service charge arrears.

These temporary restrictions on commercial landlord enforcements have been extended throughout the COVID-19 situation, most recently to 25 March 2022.

For landlords whose tenants are themselves faced with severe financial distress and have little prospect of being able to settle arrears, the re-instatement of landlord enforcement rights is likely to coincide with a barrage of tenant company voluntary arrangements (CVAs) or administrations.

In spite of these challenges, the situation is likely to present opportunities for real estate investors with capital to deploy. As the government sets out its roadmap for the easing of restrictions, there's bullish optimism for the long-term prospects of many real estate sub-sectors, even those particularly negatively impacted to date, such as hotels.

Many businesses will have taken on too much additional leverage over the last 12 months to have any realistic prospect of trading out of their current predicament. This will inevitably lead to assets coming to market that would not otherwise have been available.

Those with capital to invest and the patience to support a turnaround are likely to be able to take advantage of declining vendor price expectations in the coming months.

How we help our clients

Working with companies, lenders and purchasers, we've been supporting the real estate industry though this period of uncertainty.

Our team has recent experience advising across the real estate sector including hotels, shopping centres, student accommodation and commercial office space.