Lease extension

[Fedupfarmer]

The firm that rents my solar farm want to extend the lease after the 25 year term,its 5MW what would you expect to get?

 

[Exfarmer]

It will be producing about £250,000 electric per year at current rates. I would be looking at £200k. Their costs will be minimal replacing odd inverter etc. Inverters to replace the lot would be in the order of 150k
They will have to pick up rates bill and metering costs
I would take it over yourself

 

[steveR]

The firm that rents my solar farm want to extend the lease after the 25 year term,its 5MW what would you expect to get?

How far from the end of the Leasheold are you please?

 

[steveR]

It will be producing about £250,000 electric per year at current rates. I would be looking at £200k. Their costs will be minimal replacing odd inverter etc. Inverters to replace the lot would be in the order of 150k
They will have to pick up rates bill and metering costs
I would take it over yourself

Are these steep?

 

[Fedupfarmer]

How far from the end of the Leasheold are you please?

Well that's still got 18 years too run,but there is all ready planning permission for 15 more years,but what they offered me for that 15 years seem very low.

 

[steveR]

Well that's still got 18 years too run,but there is all ready planning permission for 15 more years,but what they offered me for that 15 years seem very low.

Wow... that is a long way off still. I had a vision of a really old build and agreement!

I wonder if I should expect a similiar offer shortly? No PP applied for to my knowledge. I would speak with the kids, but I would anticipate taking the site on for ourselves. Licence to print money, even if it was not upgraded with modern PV panels nearer the end.

Can I ask who you are with...? PM of course

 

[MrNoo]

Well that's still got 18 years too run,but there is all ready planning permission for 15 more years,but what they offered me for that 15 years seem very low.

I think you should be "demanding" and not being "offered"
They wanted a 40yr deal here, but instead have extensions in 5 yr blocks, they pay all legals and rent can be rejigged but on a profit % so rent or profit (whichever is higher) gets paid.
I'm betting they dont wish to rip it all out at vast expense so I would imagine you are in the driving seat re negotiations, but then guessing yours was one of the earlier ones when subs were present and rents were north of £1500/ac, no subs anymore

 

[Doing it for the kids]

I think you should be "demanding" and not being "offered"
They wanted a 40yr deal here, but instead have extensions in 5 yr blocks, they pay all legals and rent can be rejigged but on a profit % so rent or profit (whichever is higher) gets paid.
I'm betting they dont wish to rip it all out at vast expense so I would imagine you are in the driving seat re negotiations, but then guessing yours was one of the earlier ones when subs were present and rents were north of £1500/ac, no subs anymore

what if you say no and buy it back for £1 at the end of the lease

now that is a conversation worth having

 

[Spuddler]

Basically they are putting in for extensions so they can go back to their investors to get more cash.

 

[steveR]

Basically they are putting in for extensions so they can go back to their investors to get more cash.

Be nice if they spend the time and the money, getting an extension, and then the Landowner declines their offer!!

 

[Against_the_grain]

We were also approached after 3 years of instillation. Rate was if I remember correctly 1/3rd of current rent. Now 6 years in and all has gone quiet about extention

 

[Forkdriver]

Basically they are putting in for extensions so they can go back to their investors to get more cash.

Or to sell the company with a longer lease in place as it will be worth more.

 

[steveR]

We were also approached after 3 years of instillation. Rate was if I remember correctly 1/3rd of current rent. Now 6 years in and all has gone quiet about extension

Someone had been at the wackybaccy with a derisory offer like that!! Taking the pi$$ big time!

 

[steveR]

I might consider an extension, IF there was a big hike in present, and future rental...

But it would need to be substantial.

I like the "oh so generous" offers, to buy out my land Leasehold agreement too. Those started off at around 8 years of annual rental and have crept up

 

[snarling bee]

My view is that I want to take them over myself (more likely my decendants)
Or you could take the view that it will be nationalised by the next labour government and take a big wedge of cash now while it is still worth something.

 

[Doing it for the kids]

This is all crystal ball stuff.

feels odd that rents will be lower when all the costs like grid have already been spent!

longer you leave it the better your position is I would have said

 

[snarling bee]

I might consider an extension, IF there was a big hike in present, and future rental...

But it would need to be substantial.

I like the "oh so generous" offers, to buy out my land Leasehold agreement too. Those started off at around 8 years of annual rental and have crept up

I had an offer of 14x rent for 21 years of rent, land not included. It was tempting.

 

[Doing it for the kids]

I had an offer of 14x rent for 21 years of rent, land not included. It was tempting.

so if you were on 1k per acre now They offered you 14k for another 21 years?

 

[snarling bee]

so if you were on 1k per acre now They offered you 14k for another 21 years?

I was offered a lump sum of 14x todays rent, they would take the next 21 years rent including indexation (to the end of the lease). I have had similar offers where they were buying the freehold as well, so they were told to FO.

 

[steveR]

I had an offer of 14x rent for 21 years of rent, land not included. It was tempting.

Can give a big dump of cash flow for a project or pay off the tax man for Death Duties and the like, I guess. Your figure is better than I was offered...