British Property Federation campaign gains unprecedented support.
A campaign by the British Property Federation (BPF) has achieved an “unprecedented level of support” from some of the UK’s biggest retail landlords who have said they will “go the extra mile to support firms through the downturn”.
Property heavyweights, including British Land, Bruntwood, Development Securities, Hammerson, Hermes, Land Securities, Legal & General, Lend Lease, Local Shopping Reit, Prupim and Segro have pledged support to occupiers and agreed to work closely with tenants and be open to discussing more flexible terms for sustainable businesses.
The BPF said that this is the first time that any such pledge has been backed by so many major landlords and comes as many retailers will have just paid their quarterly rents; an archaic rents system that the BPF is trying to stamp out. Despite the high-profile campaign for monthly business rents, one of the UK’s biggest retail landlords Hammerson has said that it has only been approached by two companies for monthly payments this quarter day.
BPF chief executive Liz Peace said: “It’s a sad fact that some businesses will not survive the recession, but helping businesses that do have a future get through a rough patch makes perfect sense. What this means is having open discussions about cost savings, offering monthly rents, or other temporary support and going that extra mile.
“Offering support for ailing retailers has meant the property industry has sometimes drawn criticism. In some CVAs landlords have taken a hit and found themselves caught between a rock and a hard place. Do they tear up leases because retailers have made bad business decisions and risk antagonising their other tenants who view it as a subsidy, or do they stand firm and then get blamed for the insolvent retailer going under? It’s a tough call.”
Analyst KPMG has forecast that more businesses failures and insolvencies will arise by the end of March as retailers struggle to pay quarterly rents and asses future prospects for the next quarter. KPMG has cited the added pressure of poor weather conditions, the rise in VAT and downtrodden trading for the potential rise in failures.
KPMG UK head of restructuring Richard Fleming said: "March rent quarter is often one of the most difficult crunch points for struggling retailers. The credit squeeze has served to magnify the situation with even healthy businesses struggling to keep a handle on working capital requirements. Latest figures from the Insolvency Service show a hefty 240 percent increase in CVAs in just two years. Businesses, like consumers, are trying to re-engineer their debt to sensible and more appropriate levels to ensure a steady and long term recovery and, of course, return to growth."
The pledge of support comes a year after a pilot project was launched to cut service charges in shopping centres. Savings made through temporary initiatives, short-term deferral of maintenance projects and other operational costs, were passed on to tenants, while driving longer-term savings through improved process and by mutually identifying changes to service requirements also cut charges.