The Co-operative Estates handed over 250,000 sq ft of surplus leases to Legacy Portfolio in Spring 2013, in an initial step towards surrendering its unwanted UK property.
The company hired the surplus lease manager to dispose of 19 retail leases at a cost of £50m to the Co-op. If successful, the strategy may be rolled out across further non-trading leases from the Co-op's estate. The 19 leases are spread across the UK and were largely inherited from corporate acquisitions.
Geoff Player, director of commercial and investment property at the Co-operative Estates, said:
"The pilot will allow the Co-operative to benefit from Legacy Portfolio's expertise and for their effectiveness to be measured as a potential solution for the wider surplus leasehold portfolio. Surplus property is the topic of the moment, and businesses such as ours are looking to be innovative with space and ultimately mitigate costs."
Legacy Portfolio aims to agree lease surrenders with landlords rather than simply subletting buildings. It will aim to save money by beating the market's expectation about the overall cost of disposing of the 19 leases, which have a cost to expiry of £50m, and share in those savings with the Co-op.
DTZ advised the Co-operative Estates; Jones Lang LaSalle and FraserCRE advised Legacy Portfolio.