Post Lockdown Strategy

[SteveFW]

That looks like a rule.

6. The entire property market is in the same position as ours and a sale in execution will be avoided by the financiers.

Correct, there are in fact going to need to be a series of negotiations between different parties to determine whether there  is sufficient overlap in their interests and ability to absorb the effect of the slow down in trade to stabilise the situation, albeit at an undesirable, but survivable level.

[River Rat]

Does tenants have "force majeure" in their contracts?

Are there any contracts the land lord has that are not critical that have a "force majeure" ?

You're in an interesting space here, both sides could go legal but if all the tenants find a loophole and don't pay, the landlord will default on the loan and the property will eventually fail as a going concern. That's why I am suggesting that the rule of the game is forget what's written in the contract but accept that you have to keep the tenant alive and he has to keep you alive. It's effectively a renegotiation on all contracts.

[ACM]

You're in an interesting space here, both sides could go legal but if all the tenants find a loophole and don't pay, the landlord will default on the loan and the property will eventually fail as a going concern. That's why I am suggesting that the rule of the game is forget what's written in the contract but accept that you have to keep the tenant alive and he has to keep you alive. It's effectively a renegotiation on all contracts.

Agree.  Having said that, maybe the assumption here is that the tenant do what to keep the Landlord alive, which might not be the case.  Although a small portion of the income, the tenants such as 

estate agents and financial planners might opt for the clause to get out the contract. WHY?  Because WFH (work from home) will become a "game changer". 

[meathead]

Agree.  Having said that, maybe the assumption here is that the tenant do what to keep the Landlord alive, which might not be the case.  Although a small portion of the income, the tenants such as 

estate agents and financial planners might opt for the clause to get out the contract. WHY?  Because WFH (work from home) will become a "game changer". 

Correct me if I am wrong but this is a sociological change. Consumer shopping habits might also start changing and the way we go about doing our business

[vanniri]

Agree.  Having said that, maybe the assumption here is that the tenant do what to keep the Landlord alive, which might not be the case.  Although a small portion of the income, the tenants such as 

estate agents and financial planners might opt for the clause to get out the contract. WHY?  Because WFH (work from home) will become a "game changer". 

 

WFH might also create an opportunity in using "open"  space for fixed office address, client meeting/principles meeting space and general secretary services.

[ACM]

Correct me if I am wrong but this is a sociological change. Consumer shopping habits might also start changing and the way we go about doing our business

Agree.  I think previously P&P's online shopping didn't get traction, but with this being forced (a little) now, retailers will get better processes in place, etc. and it might (as you say) change our habbits in terms of shopping.

[River Rat]

Okay think we quickly found ourselves with one prevailing rule that this not a legal fight, virtually everything contractual is up for negotiation with a win win mindset. This really does change the power dynamics between the banks and it's customers, between landlord and tenant. It's fascinating.

 

Government and tax is a bit tricky because as pointed out most of what we have seen to date is short term and focused on basic needs. We are yet to see a real economic plan so this feels like it will be a key uncertainty for some time.

 

I would to get your thoughts on the socio or customers dynamics, during lockdown their behaviour is dictated but what happens after lockdown? I can't see it as business as usual and thoughts?

[meathead]

WFH might also create an opportunity in using "open"  space for fixed office address, client meeting/principles meeting space and general secretary services.

For instance a few business use on central office for admin, sharing costs etc?

[ACM]

WFH might also create an opportunity in using "open"  space for fixed office address, client meeting/principles meeting space and general secretary services.

The WeWork model.

[SteveFW]

You're in an interesting space here, both sides could go legal but if all the tenants find a loophole and don't pay, the landlord will default on the loan and the property will eventually fail as a going concern. That's why I am suggesting that the rule of the game is forget what's written in the contract but accept that you have to keep the tenant alive and he has to keep you alive. It's effectively a renegotiation on all contracts.

I think it would be instructive to analyse the Best Alternative To a Negotiated Agreement BATNA for each of the parties in the negotiation, this will give you an idea of their positions and what they stand to loose by not renegotiating an agreement.  This will vary from party to party but sets the scene for developing a negotiation strategy with each of them.

[River Rat]

Correct me if I am wrong but this is a sociological change. Consumer shopping habits might also start changing and the way we go about doing our business

  

WFH might also create an opportunity in using "open"  space for fixed office address, client meeting/principles meeting space and general secretary services.

  

Agree.  I think previously P&P's online shopping didn't get traction, but with this being forced (a little) now, retailers will get better processes in place, etc. and it might (as you say) change our habbits in terms of shopping.

It looks like we are developing a rule that says customers behaviour post lockdown will not be the same but will it be a permanent change or just while the virus is around?

[SteveFW]

Okay think we quickly found ourselves with one prevailing rule that this not a legal fight, virtually everything contractual is up for negotiation with a win win mindset. This really does change the power dynamics between the banks and it's customers, between landlord and tenant. It's fascinating.

 

Government and tax is a bit tricky because as pointed out most of what we have seen to date is short term and focused on basic needs. We are yet to see a real economic plan so this feels like it will be a key uncertainty for some time.

 

I would to get your thoughts on the socio or customers dynamics, during lockdown their behaviour is dictated but what happens after lockdown? I can't see it as business as usual and thoughts?

I think you will see tenants, particularly commercial occupying much smaller space, this was already a trend with the economic downturn and WFH has shown even further opportunities for efficiency.

[SteveFW]

    

It looks like we are developing a rule that says customers behaviour post lockdown will not be the same but will it be a permanent change or just while the virus is around?

I think that convenience retail, i.e. neighbourhood will still remain relatively strong, there is not yet a large threat from online like malls are experiencing.  They also tend to be less busy and they are seen as part of your community vs malls filled with people from :elsewhere".

[ACM]

Okay think we quickly found ourselves with one prevailing rule that this not a legal fight, virtually everything contractual is up for negotiation with a win win mindset. This really does change the power dynamics between the banks and it's customers, between landlord and tenant. It's fascinating.

 

Government and tax is a bit tricky because as pointed out most of what we have seen to date is short term and focused on basic needs. We are yet to see a real economic plan so this feels like it will be a key uncertainty for some time.

 

I would to get your thoughts on the socio or customers dynamics, during lockdown their behaviour is dictated but what happens after lockdown? I can't see it as business as usual and thoughts?

 

This is a massive uncertainty.  Following the news (especially with BJ (UK) now in ICU), the question is what happens if Pres. Cyril ends up sick or God forbid (passes on).  David Mabuza takes over.  Our political environment and economy will be vastly different between the approach Pres. Cyril & Mboweni is taking (possibly loan from IMF) vs. David and the unions that wants to keep absolute control of SA, funds, economy, etc.

 

NS: I'm not going into politics here to discuss politics - just stating that this uncertainty is also impacted by events that might take place in the next weeks/months.

Edited April 7, 2020 by ACM

[meathead]

How long will the virus be around, will we be able to get under control this time around or will it make a couple of appearance as the Spanish Flu did

[vanniri]

I think it would be instructive to analyse the Best Alternative To a Negotiated Agreement BATNA for each of the parties in the negotiation, this will give you an idea of their positions and what they stand to loose by not renegotiating an agreement.  This will vary from party to party but sets the scene for developing a negotiation strategy with each of them.

Such a strategy needs to be underpinned by a cost baseline, cash and otherwise. Due to uncertaintee this will be a very fluid number but is likely to move within a range. First step is to determine the range.