Apr 6, 2009
UK landlords agree retail cost-saving scheme
Apr 6, 2009
LONDON, April 6 (Reuters) - The British Property Federation (BPF) said some of its landlord members had agreed a plan to help retailers cut costs and meet quarterly rent payments after complaints the existing system was causing cash-flow problems.
The BPF said a recent pilot scheme at four shopping centres had tested ways to find savings through measures such as deferring maintenance work and identifying changes to retailers' service requirements.
The pilots, in which Next (NXT.L), New Look and Britain's two largest real estate firms Land Securities (LAND.L) and British Land (BLND.L) participated, achieved projected savings of between 10 and 20 percent, the BPF said.
The landlords have agreed to focus on 10 areas of expenditure such as waste management and security at their centres to help reduce retailer service charges and make it easier for them to meet rental payments on time.
News of the plan follows a period of intense lobbying from retail entrepreneurs such as Arcadia's Philip Green, who claim the existing regime, which demands rental payments three months in advance, places unfair financial pressure on retailers in a tough economic climate.
A slowdown in consumer spending and a shortage of credit has driven several UK retail chains, including Woolworths and Zavvi out of business in recent months, and a study by insolvency practitioners Begbies Traynor said the inflexible rent system could trigger further failures in the second quarter of 2009.
"We are obviously keen to help our tenants survive and are prepared to work with them to improve efficiency, cut costs and do whatever we can to make sure that both sides of the business can get through these challenging times," BPF Chief Executive Liz Peace said in a statement.
Other landlords who have endorsed the plan include Legal & General (LGEN.L), Liberty International (LII.L) subsidiary Capital Shopping Centres, Capital & Regional (CAL.L), Prupim, the property arm of UK insurer Prudential (PRU.L) and Australia's Westfield WDC.AX.
Land Securities' head of retail Richard Akers said the plan could be applied to "almost any shopping centre" to help identify potential savings for struggling retailers.
"We all know the retail market is difficult and, as major landlords, it is a win-win situation if we can help to strengthen the position of our retailers," he said.
By 0825 GMT, shares in Land Securities had climbed 7.7 percent to 520 pence, while British Land had gained 6.6 percent to 437 pence. (Reporting by Rhys Jones and Sinead Cruise, editing by Will Waterman) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)
© Thomson Reuters 2022 All rights reserved.