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Coronavirus rent concessions: who's asked for what

As retailers today face the quarter-year rent deadline, Drapers provides a rundown of the rent concessions requests already put to landlords as a result of the coronavirus crisis. 

Frasers Group50% reduction in rent during the course of coronavirus 

Mike Ashley’s retail group has asked for a 50% reduction in rent from April to be reviewed ahead of every rent payment. It has also requested for service charges to be invoiced monthly rather than quarterly. 

In a letter to landlords on 18 March, CFO Chris Wootton wrote: “Although the government yesterday announced a business rates holiday, it does not go far enough to address the fundamental challenges facing the retail industry at this time. 

“We understand landlords must also protect their businesses and that you have suppliers to pay and your own employees to consider. We are aware of many other retailers asking for full rental holidays. In our case, however, we are more than willing to share the pain of the current situation and ask only that you accept a temporary variation to the lease so that there is a 50% reduction in rent during the course of the coronavirus pandemic. This would start from April and be reviewed ahead of every rent payment. We feel this is a fair and reasonable proposal and shows mutual support for each other in this difficult time.”

Debenhams: Five-month rent holiday and further concessions as part of its ongoing company voluntary arrangement

The ailing department store has requested a five-month rent holiday from landlords, with immediate effect as of 17 March. 

Debenhams has also written to landlords asking for them to consider further rent cuts and store closures as part of its CVA. It went into administration in April 2019 and officially launched its CVA later the same month.

Drapers understands the retailer has now advised landlords that it may require steeper rent reductions and further store closures as part of the CVA. It is understood that this is a “fallback” choice and Debenhams is “considering all options”. 

One source told Drapers: “A new CVA has been drafted up in the background in case landlords don’t play ball, but we’re all hoping it won’t [be necessary]. It’s a guessing game.”

New Look: Three-month rent holiday 

The retailer has requested a three-month holiday from landlords alongside other immediate actions to mitigate the economic impact of the ongoing pandemic. 

New Look has also put a halt on all current and future production, and is offering thousands of employees unpaid leave to ease the impact of the coronavirus outbreak

H&M Group: Rent holiday or a move to turnover rents

Drapers understands that H&M Group is negotiating with landlords over options of a rent holiday or a move to turnover-based rents.

A spokeswoman said: “All activities in the company are now being carefully evaluated – including costs and risk perspective – to be able to mitigate the negative effects associated with the virus as far as possible.

“We are constantly monitoring developments based on public announcements made by the relevant authorities. For H&M Group, this has resulted in the closure of multiple affected stores in various cities and countries and a large drop in traffic in many locations. We see it as a joint responsibility between us and our partners to ensure a financially stable and sustainable future for our businesses. Therefore, we ask for relief on the rents and charges during this period.”

Superdry: Three-month rent break 

Superdry requested a three-month rent break from landlords from 1 April. In a letter to landlords before the government called for a lockdown, Superdry’s founder and chief executive Julian Dunkerton also asked that Superdry “not be liable for any penalties associated with any keep open clauses within our agreements” should the situation arise. 

Arcadia Group: 50% rental discounts

It is understood that Arcadia is seeking 50% discounts on rent across its portfolio. The group has declined to comment. 

Monsoon Accessorize: Three-month rental deferral 

Monsoon Accessorize has told landlords it will not pay rent across its portfolio for the next three months.

In a letter to landlords, the retailer said: “As soon as the situation returns to relative normality, we will return to paying rent and at that time will provide proposals to make up the rent shortfall.”

Matalan: Three-month rent break 

Matalan has asked landlords for a three-month rent holiday after the government ordered all non-essential stores to close. 

 

 

 

 

 

 

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