Department store chain Beales seeks to agree rent reductions
- Credit: Archant � 2013
Department stores chain Beales has become the latest retailer to seek to agree rent reductions with the landlords of some of its store.
Beales, which has a total of 29 stores, including a number in East Anglia, is proposing a Company Voluntary Arrangement (CVA) under which it would pay a reduced rent under 14 of its leases for a 10-month period while it seeks to agree a longer-term deal with the landlords.
Rob Croxen, a restructuring partner at accountancy firm KPMG and the proposed supervisor of the CVA, said: “Founded in 1881, Beales is a familiar face on the high street of many towns and cities up and down the country.
“However, in recent years, the profitability of certain stores has been hampered by expensive legacy leases which were agreed many years ago.
“This CVA seeks to strike a balance which provides a fair compromise to the landlords, while allowing the viable part of the business to move forward.
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“It’s particularly important to stress that none of the stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full – something which we know from our work on previous CVAs is of critical importance to landlords.”
Beales, which is based in Bournemouth, includes stores in Lowestoft, Beccles and Diss but these are not among those affected by the CVA.
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Colin Haig, nother restructuring partner at KPMG and the second proposed supervisor, said: “Across its store portfolio, Beales holds a total of 35 leases. The company also leases offices in Bournemouth and a warehouse in Yeovil, in addition to having a long leasehold on a warehouse in Bolton.
“The CVA essentially divides this portfolio into two categories. For a total of 24 Category 1 sites, which includes the company’s flagship store in Bournemouth, the leases will be retained at current rents which will be paid monthly as opposed to quarterly for three years.
“For the remaining 14 leases, it is proposed that a reduced rent, equivalent of 30%, will be paid for a period of 10 months, while the company engages with landlords to agree the basis of any continued trading from these sites.”
Beales needs to secure at least 75% creditor approval for its CVA. A detailed proposal document will be made available to Beales creditors who due due to vote on the CVA on March 24.
KPMG said it would will spend the next three weeks in talks with creditors to ensure they understand the full detail of the proposal.
Last week, fashion and homewares retailer BHS announced proposals for a CVA under which the landlords of 87 of its 164 stores are asked to accept a reduced rent.
A rent of 75% or 50% is proposed in respect of 47 stores, although larger reductions are being sought from the landlords of a further 40 BHS shops.
The BHS stores in Ipswich, Lowestoft and Chelmsford are all among the 77 shops which the company says are viable at their current rents, and so will be unaffected by the CVA.