Government should launch an investigation into the potential abuse of its coronavirus legislation as private equity firms continue to prosper at the cost of landlords.
That was the view of Prestbury boss Nick Leslau as he continues to battle the owners of budget hotel chain Travelodge over non-payment of rent.
Travelodge, owned by New York hedge fund Golden Tree Asset Management, Avenue Capital and investment bank Goldman Sachs, this week filed documents for a company voluntary arrangement that will allow it to sidestep its obligation to pay almost half of its rent.
It has utilised the scheme despite offers of support from its landlords, including £70m of rental write-offs.
Leslau, as EG’s exclusive research revealed in April, argues the government’s recently introduced measures are ultimately hitting the finances of the very people it was seeking to protect.
“Essentially what is happening is the transference of value from the UK saver, pension fundholder, to rapacious private equity,” said Leslau. “And by having taken away the ability of property owners to collect rent, you’ve essentially said: ‘Sorry saver, sorry pensioner, the occupier is not paying the rent and therefore you’re not going to get paid your income. And by the way, that money that was destined for you has now gone into the pockets of private equity.’”
Leslau’s argument, like many landlords, is with operational businesses that had reported healthy profits prior to Covid-19. Travelodge recently announced operating profits of £130m.
“We’re all sympathetic,” said Leslau. “To lose all your revenue for three months is a disaster scenario for any business, which is why all the landlords I know are happy to lean in and help, but to then say that on the basis of the scheme the government has introduced, we’re now going to raise equity for the next two years – not knowing what’s going to happen over that two years – is just wrong.”
Last week Leslau wrote to secretary of state for business, energy and industrial strategy Alok Sharma seeking a firm indication to find a collaborative solution to the unintended consequences of the coronavirus act.
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