Co-working fright as Regus SPV applies for liquidation  

A Regus subsidiary company has applied for voluntary liquidation, which could see a major landlord lose out on around eight years of rent. Special purpose vehicle Heathrow Stockley Park Centre Ltd is owned by Regus parent IWG. The firm leases the entire 71,000 sq ft Lakeside House in Stockley Park, west London. It has not paid rent since the start of October. The building is owned by Tritax Property Income Fund. The lease runs until March 2027 but all of the tenants at the building have moved out. The SPV lists senior IWG management as officers, including Richard Morris, Regus UK chief executive, and UK finance director Peter Gibson. No guarantor Tritax Property Income Fund bought the asset from Colombia Threadneedle in June 2017 for around £25m. Regus had occupied the building since 1999. It is understood the firm has not had a guarantor for the lease for several years. Tritax has hired lawyers to advise on the matter. Tim Legge, fund manager for Tritax Property Income Fund, said: “We have worked in good faith during the last seven months to understand the future occupational requirements of the tenant at Lakeside House. “We took a very commercial and flexible approach to our negotiations, and subsequently heads of terms were finalised for the surrender of the existing lease and simultaneous completion of a new agreement for lease. The terms of the new lease incorporated the tenant’s request to reduce the lettable space, a refurbishment of the existing accommodation as well as several other rental incentives. “However, the tenant has chosen to proceed with the voluntary liquidation of ‘Heathrow Stockley Park Centre Ltd’, whilst signing a new lease on a building nearby on the park, under a different Regus entity. The lease obligations remain, and we are working proactively to resolve the ongoing situation.” Clearbell and Patrizia announced they had leased 45,824 sq ft at The Bower six minutes’ walk from Lakeside House in Stockley Park to Spaces, IWG’s self-branded ‘“creative workspace provider”. The new office will provide co-working and serviced office facilities along with a new café and club lounge available for all occupiers in the building. Co-working covenants called into question Many co-working companies use special purpose vehicles to sign up to leases rather than provide a corporate guarantee as a covenant. Buildings that are let to such companies have commonly been valued at lower prices than if they had been leased to corporates. News that a Regus SPV has applied for a voluntary liquidation will fuel concern about use of the vehicles. “People are right to question the SPV model,” said one operator. “There are question marks over it as a business model moving forward.” IWG has been ramping up its newer Spaces co-working offering in a bid to fight off competition from rival WeWork. At the same time, it is also considering selling off some of its property portfolio, following aborted takeover talks with Starwood, Terra Firma and TDR. IWG declined to comment.   To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette