Haggle over rent may decide future of Belfast House of Fraser store
Sports Direct boss Mike Ashley will have "met his match" as he negotiates with Victoria Square landlord Commerz Real over the future of the Belfast House of Fraser store, it's been claimed.
House of Fraser, now owned by Mr Ashley, will announce a spate of store closures this week, with the tycoon blaming "greedy landlords" for potentially hundreds of job losses.
The tycoon, who recently bought the department store chain out of administration for £90m, has been in tense talks with landlords over rents in recent weeks.
Those negotiations have resulted in around seven House of Fraser branches being saved from closure, including one in London's Oxford Street.
However, the tracksuit billionaire warned yesterday that "time is running out" for the remainder of the 59-store estate, which includes the Belfast branch.
A spokesman for House of Fraser said: "Some landlords are being very collaborative in order to give us a chance at turning the business around, giving House of Fraser a lifeline and saving hundreds of jobs.
"However, some greedy landlords would rather see the stores close than help save the jobs of hundreds of people.
"We will continue to try and convince these landlords, but ultimately time is running out. Some closures will be announced."
It is understood that landlords are reluctant to agree to the low rents Mr Ashley is demanding.
Graham Pierce, a partner in Belfast law firm Worthingtons and an expert in commercial property, said Mr Ashley will find it tough when it comes to negotiating with Commerz Real, the German investment fund that owns Victoria Square Shopping Centre.
"You might find that a local owner of a shopping centre might make a decision more quickly and be more entrepreneurial in their thinking. However, a fund like Commerz Real will have very deep pockets and will be an equal match for Mr Ashley, easily," Mr Pierce commented.
He said that retail leases contain a "keep open and trade" covenant, which requires a tenant to keep a shop open save in certain circumstances, such as a refit or damage.
A retailer can get round the covenant if it no longer wants to stay open - but landlords will have a remedy in damages payable by the retailer.
And a decision whether or not to close a store was subject to "all sorts of factors", Mr Pierce added.
He said a lease could be assigned or sold, but that a vacant unit may not be a marketable asset as it may require reconfiguration.
A spokeswoman for Victoria Square letting agents Lambert Smith Hampton said it had no comment to make on the talks process.
The House of Fraser Belfast store had been spared from closure earlier this year when former owners, Nanjing Xinjiekou Department Store, announced a company voluntary arrangement.
That CVA involved the closure of 31 out of 39 stores though Belfast was to remain open.