SISU 99 Year Lease? (1 Viewer)

Como · Jan 1, 2014

The freehold is not worth that much from an investment perspective, they sold most of the benefit to ACL on a long lease.

If the Club had the money they presumably could have bought the whole lease at the beginning, I presume most of the value at the moment is in ACL. How much ACL is worth is another matter.

Ideally the ground should be leased to the Golden Share.

Tonylinc · Jan 1, 2014

Ideally the ground should be leased to the Golden Share. Now that is an interesting thought!

Samo · Jan 1, 2014

Tonylinc said:
Ideally the ground should be leased to the Golden Share. Now that is an interesting thought!

So is world peace.

ericagradus · Jan 1, 2014

Just to clarify, a 99 year lease, would be treated as a 'virtual freehold' so there would be a peppercorn rent (nothing), but a premium (quite possibly the value of the freehold) to be paid.

The freehold would not be worth any more from an investment perspective.

The tenant taking the lease, would not to be the company using the ground, i.e the club, unless group sharing was permitted.

The tenant would be able to get lending against the long lease for the cost of the premium.

Finally, the benefit of a long lease would allow the freeholders to have some form of protection and restrictions over the tenant and use of the premises in the covenants and forfeiture provisions in the lease.

Rusty Trombone · Jan 1, 2014

Samo said:
Because this particular seller is only too aware that SISU will not fook off until they have something to sell at a profit and it would be in the sellers interest to have the club at the Ricoh when it is eventuallty sold.

If this were the case then it would make more sense for the seller to buy the club from SISU for the same amount as the profit SISU want to achieve, then the seller would have control over what happens to the club. Thankfully this isn't going to happen as the club is worth nothing.

ohitsaidwalker king power · Jan 1, 2014

RegTheDonk said:
Was just coming off the bog! Did SL just say something about SISU would accept a 99 year lease at the Ricoh?

Feel free to delete this thread if it wasn't.

Reg- I Havent read this thread yet...Just got back from Rotherham, but just wanted to nominate the start of this thread as the post of the year.... for an opening line even though its January 1st, its going to be a tough act to beat!!

sw88 · Jan 1, 2014

I was driving when he said this.

I'd be very surprised if this was even an option. Only way this would be considered is if every planning application in every area within 8 miles of Coventry city Centre was refused.

Astute · Jan 1, 2014

Samo said:
So is world peace.

That would be easy. Just get rid of all religions.

chiefdave · Jan 1, 2014

ericagradus said:
The tenant would be able to get lending against the long lease for the cost of the premium.

Could the owner of the freehold put a term in the lease stating that in the event of any lending being made against the lease it is void and returns to the owner of the freehold?

Wouldn't any lease have clauses regarding what happens if the leaseholder experiences an insolvency event? Again if that triggered return to the owner of the freehold how much lending would they be able to obtain against the lease as in the event of default the lender wouldn't take ownership of the lease and would have no way of recovering their money.

skybluefred · Jan 1, 2014

Astute said:
I would be delighted as long as it don't mean they would be with us for 99 years.

Don't think anybody on here would live that long.

covpete · Jan 1, 2014

Just a thought, SISU's marketing people trying to sell the club and stadium lease together "What we are selling is a huge club, massive support capable of being a Premiership club, we just couldn't organize a piss up in a brewery!"

ccfc92 · Jan 1, 2014

covpete said:
Just a thought, SISU's marketing people trying to sell the club and stadium lease together "What we are selling is a huge club, massive support capable of being a Premiership club, we just couldn't organize a piss up in a brewery!"

we should be so lucky

CCFC PimpRail · Jan 1, 2014

Surely if SISU have 25m or so for a lease, they'd have started building the new stadium by now (or is Tim going to say they can't get planning permission and have to go back to the Ricoh). Or since neither of these options are really their style, are they more likely to offer a tenner and a trip to court...?

Noggin · Jan 1, 2014

I don't see this has any real difference to asking for the freehold, if you have a 99 year lease isn't the value almost identical to haveing the freehold? we own a flat with a 99 year lease, it's value is still £165k despite us not owning the freehold, infact the freehold for all 20 flats in the block which is about 3mill value in flats is for sale for about 15k.

I don't fully understand the whole freehold thing though but im 99% sure this is how it is with the flat we own.

It's presumably not at all possible for the council to give sisu a 99 year lease without first buying acl out of the lease they own and it's frankly a ludicrous suggestion to request the council buy acl out of a lease without an agreed deal from sisu, sisu seem to be saying you sort things out with acl first and then you can offer us a lease, which boggles the mind.

Tonylinc · Jan 1, 2014

Noggin said:
I don't see this has any real difference to asking for the freehold, if you have a 99 year lease isn't the value almost identical to haveing the freehold? we own a flat with a 99 year lease, it's value is still £165k despite us not owning the freehold, infact the freehold for all 20 flats in the block which is about 3mill value in flats is for sale for about 15k.

I don't fully understand the whole freehold thing though but im 99% sure this is how it is with the flat we own.

It's presumably not at all possible for the council to give sisu a 99 year lease without first buying acl out of the lease they own and it's frankly a ludicrous suggestion to request the council buy acl out of a lease without an agreed deal from sisu, sisu seem to be saying you sort things out with acl first and then you can offer us a lease, which boggles the mind.

Your are right of course but to some extent ACL is a notion. The only real interest is that of Higgs. Provided they can be satisfied (in monetary terms) then a sale of the leasehold interest can take place.

sky blue john · Jan 1, 2014

Noggin said:
I don't see this has any real difference to asking
for the freehold, if you have a 99 year lease isn't the value almost identical to haveing the freehold? we own a flat with a 99 year lease, it's value is still £165k despite us not owning the freehold, infact the freehold for all 20 flats in the block which is about 3mill value in flats is for sale for about 15k.

I don't fully understand the whole freehold thing though but im 99% sure this is how it is with the flat we own.

It's presumably not at all possible for the council to give sisu a 99 year lease without first buying acl out of the lease they own and it's frankly a ludicrous suggestion to request the council buy acl out of a lease without an agreed deal from sisu, sisu seem to be saying you sort things out with acl first and then you can offer us a lease, which boggles the mind.

To me it just seems Sisu say there is a deal to be made but then put obstacles and demands to prevent a deal actually happening.
What Im saying is its just delaying tactics and everything hinges on the Jr.

cloughie · Jan 1, 2014

chiefdave said:
Could the owner of the freehold put a term in the lease stating that in the event of any lending being made against the lease it is void and returns to the owner of the freehold?

Wouldn't any lease have clauses regarding what happens if the leaseholder experiences an insolvency event? Again if that triggered return to the owner of the freehold how much lending would they be able to obtain against the lease as in the event of default the lender wouldn't take ownership of the lease and would have no way of recovering their money.

Now that is the deal that should be done by the council

They have income streams etc and all the rest but protection from the leaches

So sisu will probably not go for that

SonOfSnoz · Jan 2, 2014

In that bar stewards words (Mug ginity) would anyone care or be alive beyond 99 years, after he signed the shoddy Ricoh deal!
Why repeat the same mistake coming back to haunt the fans just 8 years in?
Bloody hate Albion fans!

chiefdave · Jan 2, 2014

Noggin said:
I don't see this has any real difference to asking for the freehold, if you have a 99 year lease isn't the value almost identical to haveing the freehold? we own a flat with a 99 year lease, it's value is still £165k despite us not owning the freehold, infact the freehold for all 20 flats in the block which is about 3mill value in flats is for sale for about 15k.

Your lease may well just keep renewing but if it doesn't once that lease hits 80 years remaining you'll find the value of your flat diminishing and the less time left of the lease the lower the value will be. That's because, theoretically at least, at the end of the lease the owner of the freehold can sell the freehold to Tesco to turn into a supermarket.

The freehold on your building at the moment has very little value as all the flats have a 99 year lease, as those leases diminish so the value of the freehold increases.

I would guess you pay service charges / maintenance for the building as well so essentially the owner can keep the freehold with little to no expenditure.

In practical terms the lease is exactly what SISU need, in this instance the lease lies with ACL so if they want the lease they have to purchase ACL, and, in the same way as when you purchased your flat the previous owner would have had to clear their mortgage using the money you paid, I would expect the loan from the council to have to have to be cleared.

The only advantage to SISU that I can see in owning the freehold is that it would be easier to secure borrowing against than a lease. It would also mean they could, if they wished, do pretty much anything including chucking CCFC out and knocking down the stadium part of the complex. CCC retaining the freehold would prevent this.

chiefdave · Jan 2, 2014

SonOfSnoz said:
In that bar stewards words (Mug ginity) would anyone care or be alive beyond 99 years, after he signed the shoddy Ricoh deal!

Also worth bearing in mind that in 99 years the Ricoh will be an old ground and won't be generating as much income, it may well be that a new stadium is needed by the time the lease ends. Although if the Ricoh complex is still successful and has been expanded it may well be the case they'd build a new ground elsewhere on the same site.

SonOfSnoz · Jan 2, 2014

Acl should sell the stadium to Otium with one simple clause, the golden share & Ricoh go hand in hand!
Simples!

James Smith · Jan 2, 2014

If this is true (which could be very good news) then we're basically back to square one aren't we? Since we moved into the Ricoh and certainly since Sisu took over there was the option to buy half of ACL from the Higgs and the potential to obtain the other half from the council. They could have negotiated at that point for a longer lease of say 99 years or more. The idea was as I understsnd it that we would buy ACL and benefit from revenues the stadium makes 365 days a year not just matchdays in the season.

How long has it taken to get this far and are the council likely to agree to this with the JR hanging around?

sky blue john · Jan 2, 2014

James Smith said:
If this is true (which could be very good news) then we're basically back to square
one aren't we? Since we moved into the Ricoh and certainly since Sisu took over there was the option to buy half of ACL from the Higgs and the potential to obtain the other half from the council. They could have negotiated at that point for a longer lease of say 99 years or more. The idea was as I understsnd it that we would buy ACL and benefit from revenues the stadium makes 365 days a year not just matchdays in the season.

How long has it taken to get this far and are the council likely to agree to this with the JR hanging around?

We are not back to square one Sisu are likely to have added a mountain more debt on the club !!!

James Smith · Jan 2, 2014

sky blue john said:
We are not back to square one Sisu are likely to have added a mountain more debt on the club !!!

I just meant in terms of owning ACL and playing back in Coventry

RegTheDonk · Jan 2, 2014

ohitsaidwalker king power said:
Reg- I Havent read this thread yet...Just got back from Rotherham, but just wanted to nominate the start of this thread as the post of the year.... for an opening line even though its January 1st, its going to be a tough act to beat!!

Ha Ha ! Well thank you for that honor OKP, but as everyone knows football in January is still early doors

The reference to the toilet, and apologies I wasn't clear, was because it was flushing I didn't hear exactly what SL said - it sounded to me something like SISU have said they would do a deal on 99 years. As this isn't widely reported elsewhere, perhaps it was just SL's opinion. Guess best check the Iplayer and have a proper listen.

mattylad · Jan 2, 2014

I think the charity might not be so happy to let its half of the ACL lease go for nothing more than repayment of the council loan

shmmeee · Jan 2, 2014

mattylad said:
I think the charity might not be so happy to let its half of the ACL lease go for nothing more than repayment of the council loan

If they're about to go bust thanks to legal fees and the JR going against them they won't have much choice. That appears to be the thinking.

ericagradus · Jan 2, 2014

shmmeee said:
If they're about to go bust thanks to legal fees and the JR going against them they won't have much choice. That appears to be the thinking.

I imagine that there will be a tri party agreement where the current lease will be simultaneously surrender on the grant of a new lease and there may well be a distribution of the premium by way of a reverse premium for the surrender.

In response to someone else's query. There will be standard forfeiture provisions in any lease, which will include insolvency events (still subject to court order) and the freeholder may have to consent to any charging on the leasehold title but this will always be subject to the consent not being unreasonable withheld or delayed

RoboCCFC90 · Jan 2, 2014

Can someone give an example of how much it might cost for Sisu to make this possible?

Sent from my iPhone using Tapatalk

chiefdave · Jan 2, 2014

RoboCCFC90 said:
Can someone give an example of how much it might cost for Sisu to make this possible?

As with anything you're looking at how much the seller wants but there are some figures we know already.

The most obvious way to achieve the desired outcome is for SISU to purchase ACL having an agreement regarding a new 99 year lease in place with the council. The £14m loan will have to be dealt with. 2 options here, either SISU pay off the loan or the council cancel the loan. On the face of it cancelling the loan seems a strange suggestion but if you think about it the loan was originally taken to cover the cost of the lease, the whole lease was paid up front. if we're now moving to a new lease with peppercorn rent then ACL should be due a refund on the balance of their lease which would cover the amount owed. In essence CCC could cancel the existing lease and the loan wight he 2 cancelling each other out.

SISU then need to purchase ACL. Higgs, as a charity, should not be put in a position to lose money. I believe the buy back formula valued their share at around £10m but they have also previously accepted an offer of much less from SISU, somewhere in the region of £5m. All you're then left with is how much for CCC share. This is where it gets tricky. If it was the right deal for the club, and local taxpayers weren't going to be left out of pocket, the council could hand it over of free however they will need to consider what is going on at Swansea and the EU investigation into council funding of similar projects. But potentially with noone being left out of pocket the price could be as low as £5m.

runner · Jan 2, 2014

Best idea we've heard for a long time and the fact SISU are up for it ... means one side are thinking of going around the table ... Council still have ownership ... it just might work ?

Rusty Trombone · Jan 2, 2014

runner said:
Best idea we've heard for a long time and the fact SISU are up for it ... means one side are thinking of going around the table ... Council still have ownership ... it just might work ?

I would think SISU would only be keen if they can get hold of something for much less than its worth, this is the only short to medium term way of getting a return on their 'investment'. For this reason I don't believe there is any chance of this happening.

Rusty Trombone · Jan 2, 2014

chiefdave said:
As with anything you're looking at how much the seller wants but there are some figures we know already.

The most obvious way to achieve the desired outcome is for SISU to purchase ACL having an agreement regarding a new 99 year lease in place with the council. The £14m loan will have to be dealt with. 2 options here, either SISU pay off the loan or the council cancel the loan. On the face of it cancelling the loan seems a strange suggestion but if you think about it the loan was originally taken to cover the cost of the lease, the whole lease was paid up front. if we're now moving to a new lease with peppercorn rent then ACL should be due a refund on the balance of their lease which would cover the amount owed. In essence CCC could cancel the existing lease and the loan wight he 2 cancelling each other out.

SISU then need to purchase ACL. Higgs, as a charity, should not be put in a position to lose money. I believe the buy back formula valued their share at around £10m but they have also previously accepted an offer of much less from SISU, somewhere in the region of £5m. All you're then left with is how much for CCC share. This is where it gets tricky. If it was the right deal for the club, and local taxpayers weren't going to be left out of pocket, the council could hand it over of free however they will need to consider what is going on at Swansea and the EU investigation into council funding of similar projects. But potentially with noone being left out of pocket the price could be as low as £5m.

There are a lot of assumptions in here, and they culminate in a nonsense suggestion of £5m for a 99 year lease, the equivalent of an annual rent of £50k for the whole arena. No chance.

Jack Griffin · Jan 2, 2014

Just a thought, if a 99 yr lease is worth more than a 40 year lease then wouldn't CCC giving ACL a 99 year lease be a means of securing the £14M outstanding debt.

Rusty Trombone · Jan 2, 2014

Jack Griffin said:
Just a thought, if a 99 yr lease is worth more than a 40 year lease then wouldn't CCC giving ACL a 99 year lease be a means of securing the £14M outstanding debt.

Is it not already secure?

SISU 99 Year Lease? (1 Viewer)

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