Sale of a Commercial Freehold and Share Sale of a Café Business in London

Coordinating a property disposal, new commercial lease and corporate share sale in a complex hospitality transaction

Our corporate and commercial property teams recently advised on a complex transaction involving the sale of a commercial freehold property, the grant of a new FRI lease, and the share sale of a café business in London. The matter required close coordination between property and corporate lawyers to ensure the lease structure satisfied the property buyer while supporting the sale of the operating company.

Background 

We were instructed by two closely connected clients to assist with a series of major transactions. The first client owned the freehold of a mixed-use commercial property in London, which housed a popular ground-floor café. The second client was the sole shareholder of the company that operated the café business out of the commercial unit.

The Challenge 

The overarching objective involved a complex, multi-staged transition. Firstly, the freeholder needed to regularise the occupational status of the café by granting a new, long-term commercial lease to the operating company. Concurrently, the freeholder was selling the freehold interest of the entire building to an overseas property investor.

Secondly, once the new lease was in place, the sole shareholder of the café operating company intended to sell the entire issued share capital of the business to an established corporate catering and hospitality group. This required seamless coordination between our real estate and corporate departments to ensure the property elements satisfied the buyer of the business, while also navigating novel complexities introduced by the COVID-19 pandemic.

What We Did

Commercial Property Our property team acted for the freeholder. We negotiated the Heads of Terms for a new Full Repairing and Insuring (FRI) lease for a multi-year term. This included advising on rent deposit deeds, upwards-only rent reviews tied to the Consumer Price Index (CPI), and service charge provisions. We subsequently drafted the new lease and managed the execution process.

Simultaneously, we assisted the freeholder with the sale of the freehold. This involved compiling comprehensive responses to Commercial Property Standard Enquiries (CPSEs)—including CPSE 2, 6, and 7—which covered the occupational tenancies, building regulations, and property management history. We then liaised with the buyer’s solicitors to progress the freehold sale contract to completion.

Corporate Our corporate team acted for the shareholder in the sale of the café operating company. We undertook a comprehensive review of the Share Purchase Agreement (SPA) drafted by the buyer’s solicitors. Key areas of negotiation and advice included:

• Due Diligence and Disclosure: We managed the data room and drafted a detailed Disclosure Letter, working closely with the client to compile specific disclosures against the buyer’s extensive warranties.
• Pandemic Provisions: Given the economic climate at the time, we carefully negotiated clauses relating to COVID-19. We ensured the seller’s position was protected regarding coronavirus-related government grants and successfully managed indemnities relating to potential liabilities arising from previous pandemic restrictions.
• Restrictive Covenants: We advised on the scope of non-compete clauses to ensure the seller was not unfairly restricted from future business endeavours following their exit from the company.
• Completion Mechanics: We oversaw the apportionment of outgoings, the transfer of statutory books, resignations of directors, and the final completion statements to ensure a smooth handover.

The Result 

Through close collaboration between our corporate and property specialists, we successfully achieved both clients’ objectives over a period of several months. The freeholder smoothly divested their property asset to the overseas investor, and the business owner successfully completed the sale of their company for a significant six-figure sum. This allowed the founder to realise the value of their hard work, while the business successfully transitioned into the hands of a larger hospitality group equipped to take it to its next stage of growth.

Related Commercial Property and Corporate Law Services

Our team regularly advises on complex transactions involving commercial property sales, business acquisitions and share purchase agreements. Where property and corporate elements intersect, coordinated legal advice is essential to ensure both transactions complete smoothly.

Disclaimer: The case studies on this website are provided for illustrative purposes only and do not constitute legal advice. All identifying details have been removed or altered to protect client confidentiality. Outcomes described are specific to the circumstances of each case and may not be indicative of future results. You should seek independent legal advice before taking any action based on the information provided.

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