Yesterday’s decision by commercial property group Capital Shopping Centres (CSC) to publically announce it will not be supporting JJB Sports’ company voluntary agreement (CVA) comes as another blow to the beleaguered retailer.
Landlords face a difficult choice over whether to agree to the retailer’s plans to close as many as 95 shops in the next two years and renegotiate rents on the remaining 150 properties.
Whispers of creditor dissent have been heard since the CVA announcement last week but CSC has been the first to raise its voice and Head of Retail Consulting at property company CB Richard Ellis Jon De Mello can see why it may be worried.
“The CVA is a poisoned chalice for landlords because they want these properties occupied but they do not want rental reduction,” De Mello told Retail Gazette.
“For CSC to stick to its guns reflects the problems JJB has been having for some time to position itself in the market.”
An emergency general meeting last week secured additional fundraising for the troubled company but even if the CVA is passed, by being agreed by 75 per cent of creditors, it admits that further funds will be needed.
CSC is the landlord of only four of the retailer’s stores but De Mello believes that such a high profile creditor coming out against the proposed deal could prove influential on others.
De Mello added: “I think CSC’s decision will influence other landlords, particularly those of less key locations. It owns some of the best retail centres in the country so the fact that it will not support JJB is very telling.
“Smaller landlords will be even less likely to be able to afford a lower rate, and they are doubly affected by the fact that their properties are most likely to be those disposed of by JJB.”