Landlords could fight House of Fraser deal
House of Fraser's landlords have blasted restructuring plans that will see 31 of its stores close – and could join forces to get the move thrown out.
The Chinese-owned business has announced more than half of its stores will be shut next year as part of a company voluntary agreement (CVA), including Wolverhampton's 141-year-old Beatties store.
But landlords are said to be in open rebellion over a move that has been widely viewed as a cherry-picking exercise by owner Sanpower, which is chaired by one of China’s richest men, Yuan Yafei.
The vast majority of House of Fraser stores were offloaded by the firm in buy back deals.
This includes Beatties' Victoria Street site, which House of Fraser bought in 2005 but sold the following year for £46 million.
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Now some landlords, including Naissance Capital, owner of Cardiff's House of Fraser branch, have said they will not be backing the CVA, which is to be put to a creditors vote on June 22.
Last month the landlords hired restructuring experts at Begbies Traynor and property agency JLL to represent them in talks with House of Fraser, as well as a number of other retailers and leisure groups that they believe are preparing to use CVAs to cut their rents and axe unprofitable stores.
Like the Cardiff store, Beatties had initially been earmarked for down-sizing before bosses were told of the closure plans at the eleventh hour.
Azeemeh Zaheer, chief executive of Naissance Capital, said the firm had been amenable to a plan that would have cut the size of the shopfloor from 300,000 sq ft to 80,000 sq ft.
“We had been discussing reducing the floor plate of the store and spending money on architects and surveys so we could create a viable shop for them to trade out of," he said.
The property industry is resistant to having an estimated 3.3m sq ft of retail space – the equivalent of more than 50 football pitches – dumped back into its hands without compensation.
Two years after BHS went bust, agents are still trying to find homes for around one third of its 160 stores, although the former store in Dudley Street, Wolverhampton has recently been snapped up for £500,000.
Alex Williamson, House of Fraser’s chief executive, says the retailer is fighting for its very survival.
“It is a highly emotional, highly regrettable situation that none of us either imagined or wanted to see happen, but there is simply no alternative," he said.
Three quarters of landlords must back the CVA in order for it to be approved.