Commercial Finance
Commercial investors using exit clauses in lead-up to EU referendum
Commercial property investors are reportedly writing exit clauses into contracts that will allow buyers to withdraw from the deal if Britain votes to leave the European Union.
Reuters reported that it had seen a clause written into a commercial transaction setting the deadline date for contract termination after the vote on 23 June, allowing the buyer to withdraw if the UK decides to leave the EU.
Sellers are also looking for clauses to ensure that a Brexit would not be considered a “material adverse change that would annul the deal”.
The referendum has also been linked to the fall in construction output, which was last week revealed to have reached its lowest levels for three years.
Paul Firth, head of real estate at law firm Irwin Mitchell LLP, told Reuters that a significant volume of the firm’s ‘bigger’ investment deals, worth up to £80m, either included Brexit clauses or efforts had been made to include them, with this becoming increasingly popular as the vote approaches.
Reuters said that half of the 24 law firms, brokerages and commercial property firms it spoke to had used Brexit clauses, brokered a deal with such a clause or had requests to include them in at least one deal.
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However, Adrian Dadds, director of St George’s Finance, said he has not come across any break clauses being added but was expecting the number of commercial transactions the firm conducted to slow down in the coming weeks.