High street landlords are gearing up for war with retailers, whom they accuse of railroading them into agreeing to rent cuts via increasingly controversial company voluntary arrangements (CVAs).
Struggling businesses including the department store chain House of Fraser, the children’s retailer Mothercare and the Carluccio’s Italian restaurant chain are all seeking CVAs, where property owners accept lower rents to help a tenant avoid financial collapse.
But they are meeting with growing resistance from major property companies, alarmed by the growing list of CVAs sought this year by chains including Prezzo, Jamie’s Italian, Byron, New Look and Carpetright.
Property companies Legal & General and Westfield are among about a dozen landlords plotting opposition to the imminent CVA by House of Fraser, owned by China’s Sanpower.
They are weighing up plans to make demands in return for their approval, such as detailed financial forecasts, an equity stake in the 169-year old department store chain or a cut of its future profits.
Restructuring experts from consultancies Begbies Traynor and JLL are advising the property companies, who can block the CVA and demand improved terms if more than a quarter of landlords rebel against the company’s proposed terms.
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