Leisure Unit, East Anglia

Client: UK Institution

Sector: Leisure


Our client owns a standalone 35,000 square-foot retail warehouse let to a leisure operator on a long-term lease. When Covid restrictions rendered that business unviable, they successfully initiated a Company Voluntary Arrangement (CVA) that renegotiated the rent from £250k per annum to nil. As part of the CVA, our client had the right to terminate the lease agreement and protect the asset value. Credo was hired to source a replacement tenant in the leisure sector or explore alternative uses, including retail, warehousing, and residential. The ultimate aim was to re-let the space to another party or bring the existing tenant back to the table to agree a deal.


With the existing occupier paying no rent and being in arrears approaching £200k, our client had reasonable concerns surrounding the viability of the business going forward. In addition, market sentiment had fallen sharply in this sector, and investment values were on a steep downward trajectory. 


With expert help, challenges like this are opportunities to capitalise on the flexibility given by the CVA to remove the existing tenant to maintain or improve the asset value.

Process and insights 

Upon receiving instruction from our client, we analysed occupational requirements and implemented a strategy to maintain investment value. 


A replacement tenant was secured at a marginally lower rent, which was offset by the fact that investment values were higher for the alternative use, meaning the asset’s capital value was maintained. During the process, offers were also received from residential developers and retailers. 

Meanwhile, when the existing tenant discovered they were about to lose the property, they confirmed that they wished to remain in situ. Together, we negotiated an improved deal for our client, which resulted in the full repayment of arrears and an agreed 15-year lease at a rental value of £275k per annum. We managed the legal process to completion and, on instruction, sold the asset to an investor for 40% above the Institution’s book value.

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