CVA boom is bad news for landlord British land but it sees signs of easing headwinds
Property giant British Land criticised retailers seeking to cut their rent bills as it released its full-year results on Wednesday. The company said some chains have been asking it to sacrifice too much as its portfolio value fell 4.8% to £12.3 billion and its net asset value was down 6.4% to 905p a share.
In the year to March, the Meadowhall owner had lost millions of pounds in rent due to the large number of retailers launching company voluntary arrangements (CVAs) to allow them to exit their leases or reduce their rent bills.
The company is currently in talks with Debenhams over its CVA proposals and, like other landlords, it has been hit hard by a number of big-name CVAs or company failures in recent years. The UK retail sector has seen store closures at BHS, New Look, House of Fraser and many more (not forgetting the looming and long-expected Arcadia CVA.)
British Land boss Chris Grigg said that some store chains “are pushing it further than feels fair,” a comment that came just a day after rival Landsec also reported falling income at its malls, at some London stores and its retail parks.
But Grigg did offer a sign of hope and he said the company expects “the London market to remain active, as occupier demand for the highest-quality space continues to be firm and supply is relatively constrained.”
And he added that while “retail is likely to remain challenging as structural change continues, there are early signs in parts of our portfolio, that some of the short-term operational headwinds impacting retailers are easing.”
He also said that “smaller, more focused retail” saw “operational outperformance” in the last year.
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