Tempers fray as rent day looms
Published: 12 March, 2009
A rising tide of retailer failures is increasing pressure on landlords to make concessions ahead of the March quarter day, when store rents fall due.
The pre-pack administrations of the Mosaic stable of fashion brands and the Stylo Barratt shoe chain have increased pressure on landlords as they see void levels rising in their centres. Other retailers are also thought to be preparing to abandon large parts of their store portfolios.
Speaking at the Shopping Centre Management conference in Liverpool, Jeremy Collins, BCSC president and head of store development for the John Lewis Partnership, reiterated his call for concerted action before the rents are due. And he praised institutional landlords like PruPIM for being flexible.
But it is becoming clear that there is still no unanimity in the market, and the decision by landlords to vote down Stylo Barratt’s proposed CVA showed that many, especially the smaller private landlords, are in no mood to compromise.
Savills’ retail director Nick Symons said a number of landlords were agreeing monthly rents, but were tending to do this through a side letter rather than amending the lease so that the agreement is personal to the existing tenant and non-assignable. Others were making it clear that the move to monthly rents was a temporary measure, and that they expected to revert to quarterly payments when the market improves.
And Caroline Howard, partner at Davies Arnold Cooper, pointed out that there are other legal pitfalls to avoid. “You have to be very careful about what’s written,” she said. “For instance are you inadvertently releasing a guarantor? And if you agree to a rent holiday is it really a holiday or is the rent actually just deferred, and becomes payable at a later date?”
However she said sentiment is still fluid and many landlords, faced with the prospect of losing a tenant totally, are becoming more amenable to forgoing rent so at least they have rates and service charges paid.
Coast and three other ex-Mosaic brands have been brought together by Aurora
