Orchard Street Investment Management

TENDER PROCESS

We identified retail sites within our portfolio that were key sites which we knew we would want to retain and had significant car use/anchor tenants which we hoped would be attractive to EV car users.

We appointed an external EV consultant who assisted with the tender process with the EV charge point providers. The consultants assisted in producing analysis on the different rental models being offered by the EV charge point providers (pay per bay, profit rent and profit share on electricity used).

The key metrics for our choice of EV charge point provider were:

• Rent – the type and amount of rent the EV charge point provider was willing to pay for each site.
• Covenant Strength – trading history for the proposed EV charge point provider.
• Historic Performance – had the EV charge point provider installed any charge points before and what did their forecourts look like. Would their charge points and branding fit with the portfolio’s branding/approach to retail parks.
• Source of electricity – ensuring that the electricity was sourced from green/renewable sources and the ESG credentials matched OSIM’s ESG requirements.

OSIM selected Gridserve to be their chosen provider for their roll out across key sites in their portfolio. Gridserve had demonstrated credibility with their forecourt at Braintree and their approach to sources of power/transparency on rental models.

 

What were the challenges that you had to overcome?

Occupational lease terms

Occupational retail park leases include a number of standard provisions relating to no build zones, minimum number of spaces, visibility splays and restrictions on structures being erected on the car parks. A significant number of these leases were entered into in the early 2000s before EV charge points were contemplated and therefore this proved challenging for OSIM to balance leases from the early 2000s with customer demands in the 2020s.

We would encourage any potential landlords who want to install EV charge points across their portfolios to invest in assessing the development constraints for each site as part of the EV charge point project. This will ensure sites which are selected do not have any leases with restrictive covenants which limit the ability of you, as landlord, to install EV charge points.

Powering the charge points

Another challenge has been powering up the EV charge points as this has required new substations and cabling to be installed across the sites. This has involved substation leases and easements to be entered into by us, as landlord, and the documents negotiated by DLA Piper on our behalf. These documents are often difficult to negotiate with the electricity providers which delays the ability for the charge points to be available for use. We would push for these documents to be agreed with the EV charge point lease at the same time rather than as a secondary document.

Service charge

When we originally commenced the EV charge points project, the market was not settled on whether EV charge point providers should contribute towards the service charge for a retail site and, if they did contribute, how much they were required to contribute/by what metric it should be measured. This was an area we have developed our understanding of, with the assistance of DLA Piper, and would now encourage landlords to seek to include an express fixed cap subject to indexation rather than the standard requirement for a fair and reasonable sum due to the limited comparisons for managing agents to draw upon.

 

What role did DLA Piper play in the roll out?

We agreed initial terms with Gridserve in February 2022 and DLA Piper then acted on our behalf to draft and negotiate the key terms. DLA Piper were able to provide market advice on the requirement for EV charge point providers to contribute towards the service charge for the retail sites, repair and maintenance obligations and the approach to relocation in the EV charge point leases. DLA Piper acted on our behalf to agree a form of precedent lease with Gridserve which we then rolled out across the properties identified in the portfolio. DLA Piper have successfully agreed EV charge point roll outs on our behalf with Gridserve and Tesla across sites in England and Scotland.

We were really pleased with DLA Piper’s depth of knowledge of this sector and their advice on market expectations for institutional landlords. We would trust them to act on our behalf for future EV charge point projects across our portfolio.

 

Have you completed any installations yet?

Yes – Gridserve are now live at our retail park in Slough (see photo) and will shortly be going live at another of our sites in Taunton.

 

Would you do this project again?

Yes – the market is maturing all of the time with the increased ownership of EV cars. There is a growing demand for EV charge points and this will be an added pull factor for customers visiting our retail assets. We look forward to working with DLA Piper on our next roll out.