58 leases, one negotiating position

Portfolio strategy · Crisis response · Negotiation

The situation

When New Zealand entered its first COVID-19 lockdown in March 2020, gym operators — whose entire model depends on physical access to premises — faced an immediate existential problem.

Within days of the announcement, a national fitness chain engaged Klug as sole tenant representative across 58 leases — 57 clubs and a head office. There was no clear pathway to rent relief, and the landlords were under pressure of their own.

The challenge

Lease obligations did not pause. Rent accrued across all 58 sites while the premises were legally required to close and generated no revenue; monthly exposure ran into six figures. Left alone, the operator faced accumulating arrears, lease defaults and the collapse of a business built over years.

Every lease had a different landlord, different terms and a different leverage position, so no single solution existed — each negotiation needed its own strategy.

The approach

Klug triaged the portfolio against four criteria: the strength of the landlord relationship, the lease terms including any force majeure provision, each site’s strategic importance to the network, and the leverage actually available.

That produced a priority order and a site-specific strategy. Klug then led every landlord negotiation directly, holding one consistent position across the portfolio rather than letting each site be argued in isolation.

The outcome

Abatements of 40–100% were secured across the portfolio, worth $1,010,016 in net present value measured against the landlords’ opening positions. The mix varied by site: full abatement in some cases, a combination of abatement and deferral in others.

Klug also used the disruption to restructure terms more broadly — rent reductions, removal of onerous make-good obligations, and negotiated early exits from two underperforming sites.