British Land’s rental income knocked by retail failures
The property giant has been hit by sweeping store closures this year.
Property giant British Land has warned that the recent spate of retail failures have knocked its rental income.
The retail sector has been hit by a number of administrations recently, with both Maplin and Toys R Us disappearing from the high street.
In addition, household names such as House of Fraser, Mothercare and Carpetright have been shutting stores though Company Voluntary Agreements (CVAs), an insolvency procedure which must be approved by landlords.
British Land, which owns and manages a range of commercial properties, said retail administrations and restructurings through CVAs had cost the firm 1.6% of its total group rent since April 1.
In a statement ahead of its annual general meeting (AGM), British Land said the retail market “remains challenging”.
“The impact of long-term structural change, driven by the internet, is being compounded by short-term headwinds,” the company said.
“As a result, there have been well-publicised retailer failures and further CVAs from those with more challenged business models.”
British Land said there was “increased polarisation” in the retail sector, but that its property assets were well-positioned to cater for the industry’s successful businesses.
Retailers have been hammered by Brexit-fuelled inflation, soaring business rates and falling consumer confidence.
Restaurant groups have faced similar headwinds, with Byron, Jamie’s Italian and Prezzo all undertaking CVAs.
CVAs have proved controversial with landlords, who have complained that they are being unfairly targeted by retailers looking to get out of their rent obligations.
The industry was vocal in its criticism of House of Fraser’s CVA, with some landlords threatening legal action against it.