Tesco’s Fresh & Easy Is No More Popular In Real Estate Than In Produce
Jim Prevor’s Perishable Pundit, January 28, 2010
We have written extensively about Tesco and, specifically, its effort to establish a foothold in America under the name Fresh & Easy. You can review this extensive coverage here.
One of the themes that came out is that in all the perishable areas and especially in produce, Tesco entered the market with an attitude that was widely perceived as arrogant. Professionals who had worked their whole lives in the business were being given “orders” that really made no sense.
Now comes word that the real estate industry also suffers from the same kind of treatment. A fellow named Chris Rodriguez is a well known real estate professional and had an e-mail exchange with Tom Scorer, the British transplant who does real estate for Fresh & Easy. He decided to post it on his blog, Retail Chart Commercial Real Estate Blog:
Fresh & Easy Real Estate Director Making Empty Threats
Posted on January 19, 2010, 5:18 pm, by Chris Rodriguez, under Brokerage, Legal, Retail, Tenants, Thoughts.
I just had to post this. I just closed a Fresh & Easy ground lease that was purchased by Fresh & Easy on 12/31/09. Earlier today, we sent out an email blast announcing the sale of the property. I received the following email (with his attorney cc’d as well) from UK transplant Tom Scorer, Real Estate Director for Fresh & Easy at 3:25 PM this afternoon:
I have received your email blast directly and from many other sources.
The executed PSA contains a confidentiality clause, which clearly prohibits the publication of any details of the deal without our express permission, which was not sought and is not given. See below the relevant extract from the agreement:
16.8 Confidentiality. All information, studies and reports relating to the property obtained by Buyer, either by the observations and examinations of its agents and representatives or as disclosed to it by Seller, shall remain confidential and if the transaction contemplated herein fails to close for any reason, Buyer shall deliver to Seller, at no cost to Seller, all such information, reports and studies, and Buyer shall make no further distributions or disclosures of any such information, reports and studies. Buyer and Seller agree that, to the extent reasonably practical they shall keep the contents of this Agreement confidential and that no publicity or press release shall be made regarding this transaction without prior written consent of the other party.
Please be advised that your publication breaches the recorded agreement. We are considering the action we will take.
Fresh & Easy Neighborhood Market Inc.
Real Estate Director
— — — — Disclaimer — — — — –
This is a confidential email.
Fresh and Easy may monitor and record all emails. The views expressed in this email are those of the sender and not Fresh & Easy. Fresh & Easy Neighborhood Market, Inc.
2120 Park Place, El Segundo, CA 90245
Naturally, I could not resist responding to such foolishness. Here is the email I sent back to the bloke:
This is one of the most ridiculous emails I have received in my career. Your claim is a joke and without merit. I don’t really think I need to explain why but I will do so anyway.
You (on behalf of Fresh & Easy) went out of your way to circumvent my involvement in this transaction, specifically refusing to include language in the purchase and sale agreement protecting my position and specifically refusing to have brokerage representation in the purchase. As a result of your efforts, I am not a party to your purchase and sale agreement and am therefore not bound by its terms.
The property was marketed for sale for well over 1 year prior to your purchase. The terms of your lease agreement are widely known. The date, purchase price and identity of the purchaser are public knowledge. If you take a moment to read the language of your PSA that you so kindly provided to me, you may notice that particular phrase stating “to the extent reasonably practical.” I would think that information that resides in the public domain would fall outside of this clause, don’t you?
Lastly, I would think that any claim you may attempt to make would need to be based upon actual damages. Do you have actual damages? You may want to brush up on your US law. Your attorney is a very good one. You should consult him before sending out emails like this again in the future.
At this point it seems like you may just be wasting your company’s cash on unnecessary legal fees. Maybe I should copy your superiors in the UK. I’m sure they would love to hear how you are spending your time these days.
Thanks for the new blog content. I haven’t written a post in quite some time. This one should be up shortly.
P.S. — As a point of clarification, I did not consult any person or entity which was directly involved in this transaction in preparing my email. I did not, nor am I required to, seek approval from anyone prior to sending the announcement.
Tom, instead of threatening brokers with lawsuits, why don’t you focus your attention on opening stores that actually attract customers? Don’t you think that might be more productive and beneficial to the bottom line? Just a thought.
For the record, the property was a ground lease. The leased fee interest (land) was purchased by Fresh & Easy on 12/31/09 for $2,650,000 which was equivalent to an 8.49% CAP rate on the in-place ground rent of $225,000/year NNN. If you are a seller negotiating with Fresh & Easy to sell them your property, I would think this would be a pretty good comp for you to reference when they submit their 9.50% CAP offers.
I love citizen journalism.
As we mentioned here, Tesco is now looking to purchase properties in the US. The company may, in fact, ultimately make money on the real estate but this e-mail had a couple zingers: “You may want to brush up on your US law.” — and — “Tom, instead of threatening brokers with lawsuits, why don’t you focus your attention on opening stores that actually attract customers? Don’t you think that might be more productive and beneficial to the bottom line? Just a thought.”