Landlords lose patience as House of Fraser one-year store rent deals near end
today Apr 23, 2019
As House of Fraser heads towards the first anniversary this summer of its administration filing and buyout by Sports Direct, there have been reports that some landlords who agreed to rent-free deals are losing patience with the retailer.
Sports Direct boss Mike Ashley said when he bought the chain that he wanted to keep 80% of its stores open. He struck a number of fast deals with landlords to waive or reduce rents that at least meant the stores were occupied and the business rates were being paid by HoF, rather than by the landlords themselves.
However, these deals were mainly set to run for one year only and little progress seems to have been made since on turning around the chain’s fortunes and reaching a more permanent solution for its many store leases.
The Guardian reported that the landlord of HoF’s Rackhams in Altrincham “has served Ashley a notice to leave the premises” and that others “could now follow suit.”
The Rackhams Store is in the Stamford Quarter shopping centre that is owned by M&M Asset Management. The newspaper said that it had agreed to accept no rent for a year under a short-term lease, and that this was “one of dozens of similar contracts thought to expire in September.”
The company told the newspaper that it can't give Ashley any more time as it needs to move ahead with the future of the site and will redevelop it into flats.
Iain Minto, M&M’s shopping centre director, said: “Sports Direct have been in this building for nine months and at the moment they’re still trying to work out what to do with the wider business. We don’t want the building to sit there forever and a day, we want to invest in the town. There are nearly 60 House of Fraser stores. I imagine there will be other landlords with House of Fraser, scratching their heads wondering what to do with the space.”
It has been suggested that Mike Ashley has scaled back his plan to keep almost all of the stores open with this particular report saying that his new target could see him maintaining around two-thirds of the store estate, but that he hasn't yet decided which are the most sustainable sites in the long-term.
Most of the agreements Ashley made on the stores were short-term deals with his £95 million outright purchase of the Frasers building in Glasgow being a rarity.
As the M&M plan shows, there's a strong chance that many of the stores that will close will be converted to non-retail use as it will be hard to find tenants for such large spaces. That has been seen by the fact that some former BHS stores are still empty, almost three years after that chain went under.
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