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Sushila Pindoria, senior associate at Bircham Dyson Bell LLP
believes that the letter being coordinated by the Property Managers
Association, which represents large high street retailers including
Schuh, Comet, Boots Opticians and New Look to request monthly
rental payments from their landlords, is likely to fail.
"Landlords in these tough economic times are
sympathetic to tenants who are incurring 'genuine' cash
flow problems but I'm not sure that these major retailers can
really claim that they face genuine cash flow problems; are they
just using their bargaining strength in the market to obtain a
better commercial deal?" explains Sushila.
"The danger is that if landlords receive too many of
these types of applications from their tenants whether they are
anchor tenants or the small private retailer; they are likely to
raise the question as to whether they can afford to do this for all
their tenants or just those facing a real financial hardship. The
effect will be that requests made by the smaller tenants who are
having real cash flow problems will not be treated as seriously as
they ought to.
"There is always an exception to the rule as we have
seen with the recent Game Group administration and one can only
sympathise with the estimated loss of 6,000 jobs, but one has to
look more closely at the figures here. The percentage of the
outstanding rental payments (i.e. Ł21m) against the actual
the Game Groups Ł120m debts is 11%. The damage has already
been done to other parts of the Group's business and by
agreeing to monthly rents would its landlords be providing a short
term cushion?
"Surely in circumstances like this businesses should be
focusing on long term recovery to identify if there is any
'life' in the business. It will be interesting to see how
successful the large retailers will be in imposing the monthly
rental payments upon their landlords."
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