Herne Hill news, chitter chatter and gossip
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friendofdorothy
Solidarity against neoliberalism!
Thanks snowy, I'd heard the sad news.
you'd be surprised but they often do - looking for parking half the time it seems
Cat Fan
Cats and stats
I was wondering why those railway arch shops are vacant on the main strip. And why Canopy Brewery packed things in. Then I read these reviews
uk.trustpilot.com
The Arch Company is rated "Poor" with 2.6 / 5 on Trustpilot
Do you agree with The Arch Company's TrustScore? Voice your opinion today and hear what 36 customers have already said.
uk.trustpilot.com
Crispy
The following psytrance is baṉned: All
Can confirm, rents have gone up big time. Makerspace is doing ok; membership income scales very well and we're not trying to make a profit, but everyone else on the estate is struggling. I wouldn't be surprised to see the mechanics go soon. Arch co. have massively reduced the available space for cars.I was wondering why those railway arch shops are vacant on the main strip. And why Canopy Brewery packed things in. Then I read these reviews
The Arch Company is rated "Poor" with 2.6 / 5 on Trustpilot
Do you agree with The Arch Company's TrustScore? Voice your opinion today and hear what 36 customers have already said.
Cat Fan
Cats and stats
It used to be craft breweries that hit the sweet spot in terms of requiring lots of floor space but not necessarily lots of natural light and footfall.
Now I have no idea, the original reason people used arches was cheap rent there's no point in offering them at/above market rent when there are so many normal shops in better locations that are lying empty.
Now I have no idea, the original reason people used arches was cheap rent there's no point in offering them at/above market rent when there are so many normal shops in better locations that are lying empty.
Tulster218
Well-Known Member
There is no point offering anything above market rent. That's what market rent means.
Cat Fan
Cats and stats
Actually I would argue that market rent is a slippery and mostly meaningless term used by brokers.
In the case of Arch Co they must have put together a business plan based on an assumption of "market rent" that is way out of line with what the actual market is willing to pay for this type of property.
A reckoning is on its way, just like for the owners of big buildings in the city. Dodgy property investments have already bankrupted several local authorities who have to account for it "properly".
In the case of Arch Co they must have put together a business plan based on an assumption of "market rent" that is way out of line with what the actual market is willing to pay for this type of property.
A reckoning is on its way, just like for the owners of big buildings in the city. Dodgy property investments have already bankrupted several local authorities who have to account for it "properly".
teuchter
je suis teuchter
Well, that's what the market rent is.
Just because someone makes a wrong assumption or estimate of what the market rent is for something, it doesn't stop it from being a meaningful and real concept.
Tulster218
Well-Known Member
Of course it doesn't. Your conceptual model of how the world works is completely wrong.
Torpid Scorpion
Basket case
Many of the loans these large landlords have on the balance sheet have covenants that are based on average rental potential; hence they are incented, as long as cash flow permits, to keep the spaces empty instead of letting and risking a breach of covenant.
teuchter
je suis teuchter
Can you explain in a bit more detail what that means exactly?
Torpid Scorpion
Basket case
I will try.
typically the legal entity that operates retail premises will finance the acquisition of those premises by taking a loan. unlike say your mortgage or car loan, these loans have additional conditions (covenants) that need to be satisfied aside from ‘make the payments on time’. A typical one is maintaining the loan to value ratio (LTV) above a certain level. The mechanics of how and when the value can be reasessed vary and are specific to the loan, but typically have to do with the cash flow potential of the property.
so, if you as a debt funded landlord have some empty premises that you are ‘just about to get a tenant for, any day now’ you can say that it still has the higher earning potential. But if you bite the bullet and start writing long leases at lower prices, then you will be pushing that ratio down toward breach. And if you breach, the lenders will have some recourse which will be unpalatable to the landlord; perhaps callign the loan, or ratchetiing up the interest rate, or exercising some kind of debt-to-equity covnersion right.
this article from a few years back illustrates the dynamic that can result:
A wake-up call from retail covenant breaches
Shopping centre owners are falling foul of their debt terms, forcing lenders to consider the most effective response
www.recapitalnews.com
I dont know what the situation with the balance sheet of ‘The Arch Company‘ is, but in 2018 blackstone led a 1.5 billion raise to buy out network rail, with apparently some 750 million coming from Merrill lynch (there are articles in the FT from 2018/19 on this but they are behind a paywall). Typically the terms of these things will be ‘commercial in confidence’ So not a lot of info on the covenants.
Hope that helps. More generally, to appreciate the complexity of leveraged financing have a look at this: https://www.cliffordchance.com/cont...n-us-and-european-leveraged-finance-terms.pdf
You might want to skip reading that unless you like having a headache which requires several stiff drinks. The complexity from all of this arises from the old truism: “if you owe the bank a little money and cant pay, you have a problem. If you owe the bank a lot of money and cant pay, the bank has a problem.”
just another case of entirely legitimate mechanisms in financial capitalism leading to bad incentives and negative consequences.
teuchter
je suis teuchter
I see, thanks. Or, I don't see really.
I'd have thought, if I were a lender, and I was worried that they weren't going to pay me back, I'd be incentivised to assess the things on the basis of what they were actually getting paid in rent rather than what they claimed to be about to be getting paid in rent.
I'd have thought, if I were a lender, and I was worried that they weren't going to pay me back, I'd be incentivised to assess the things on the basis of what they were actually getting paid in rent rather than what they claimed to be about to be getting paid in rent.
Cat Fan
Cats and stats
Imagine you are the Arch company and your boss ("Mr Blackstone") employs you to manage the arches.
Would you be the one to tell them that valuing the arches at 1.5 billion was a mistake and they will never see a good return on that investment, or would you keep on trying to find tenants willing to pay silly amounts of rent?
It's much more convenient for the owners to leave it empty than face up to reality that it's a dud investment.
The other this is that they are assuming that the current economic situation is over in a year or two, and so signing 10 or 20 year leases at reduced rates is a bad idea.
teuchter
je suis teuchter
The point is not about what I'd do but what my "boss" would do. That is, notice that the places are standing empty and not earning anything. And not just take my word for things.
Mr blackstone is looking at excel on his yacht, not walking down coldharbour lane
Crispy
The following psytrance is baṉned: All
They're gone. Another local business destroyed by the Arch Co.
snowy_again
Slush
So far it's who:
Walters the butchers
Seasons greengrocers (twice)
Canopy
The mechanics
The car place the other side of canopy
The fishmonger?
Is the food & veg place in Bath estate surviving?
Its been going on for so long I've forgotten what replaced Bleu in the end unit.
New additions are lark and the cafe place -- plus the electricity transformer unit that they forgot to instal the first time around and tried to kick out Elaine the flower lady when they realised their mistake.
Walters the butchers
Seasons greengrocers (twice)
Canopy
The mechanics
The car place the other side of canopy
The fishmonger?
Is the food & veg place in Bath estate surviving?
Its been going on for so long I've forgotten what replaced Bleu in the end unit.
New additions are lark and the cafe place -- plus the electricity transformer unit that they forgot to instal the first time around and tried to kick out Elaine the flower lady when they realised their mistake.
snowy_again
Slush
Hmm, they took the opportunity not to fight the rent increase and to retire.
Rushy
basically a scrotum
Herne Hill Forum is raising funds to bring back their kids Halloween Party. It was a super event when it last happened (or horrific, depending on how you look at it).
www.crowdfunder.co.uk
Herne Hill Halloween Celebration 2023
Herne Hill Haloween Celebration 2023 - a free, fun-filled event for families and young children, brought to you by the Herne Hill Forum
www.crowdfunder.co.uk
jimbarkanoodle
Well-Known Member
Isnt "the area around Herne Hill Station" public land? What if i want to walk my dog there and this event is taking place so i cant for 1 night of the year? Plus think of all the litter and noise. I object.
teuchter
je suis teuchter
The sky will fall in, I expect.
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