Vodafone assigned to VALEUR in 2010-2011 as part of a pan-European project the lease renewal and lease renegotiation project for: a) 57 properties, mostly shops all over Greece and one office building in Athens, and b) 100 RBS (Radio Based Stations) located all over Greece. VALEUR was already known for having concluded a very similar exercise for 125 branches of Marfin Egnatia Bank all over Greece- possibly the first lease renegotiation large project involving an advisor in the Greek market.
Vodafone —The Challenge
· Vodafone sought to decrease lease costs for its own-managed retail network of shops throughout Greece—and some of its regional IT centers—while also managing planned renewals and considering selective expansion of its own and/or franchisee network
· Vodafone strongly preferred not to have to relocate in the event of owners’ complete refusal ronsent to any rent decreases given a reluctance to provide the budget for total relocation expenses
Vodafone’s lack of legal grounds for decreasing lease costs for existing contracts created the need to secure the consent of the owner
· Vodafone was extremely reluctant to relocate particularly in the case of RBS given the well-known difficulty of obtaining new operating permits for new locations as a result of the cumbersome administrative procedures and municipalities’ often unfriendly approach.
· The on going crisis of Greece had not necessarily resulted in lower prices for prime retail properties
The Valeur Solution
• Valeur approached all owners of the 57 properties and 100 RBS and provided them with a consistent brief regarding the company’s request.
• Valeur contrasted Vodafone with other mobile operators and provided market information pertaining to similar properties and examples of renegotiation
• Valeur adopted a steady but flexible approach by exhausting discussions with owners before closing discussions while offering to vacate surplus space when appropriate and/or relocate if absolutely necessary and occasionally offering guaranteed period of stay when appropriate.
Savings of the order of 10% were achieved in the case of renegotiations and most renewals were effected at often significantly lower rents. These were very meaningful results at the time of the project particularly given Vodafone’s reluctance to relocate particularly in the case of the RBS where new operating permits were very difficult to obtain owing to administrative procedures.