Sports Direct founder Mike Ashley has been in talks with landlords over potential rent reductions after saying he would work to keep 80 per cent of House of Fraser’s stores open.
The retail tycoon’s team have reportedly “worked round-the-clock” to reach a deal to ensure the future of House of Fraser’s stores.
“The team have been working round the clock and over the bank holiday weekend to secure as many deals as possible safeguarding stores and jobs for local communities,” CBRE head of National Agency James Keany said in light of the negotiations.
However, the new terms may not be easy terms to swallow for landlords.
According to a report by the BBC, landlords are being offered rents equivalent to 5 per cent of a store’s turnover, including a service charge.
Only “a handful” of stores are being offered the same level of rent that was being paid prior to the company’s administration.
To add to that, a small number of landlords are being asked to accept deals where they will be paid no rent, but will receive the service charge and have their business rates bills covered.
The “no rent” deals will last for two years and be subject to a three-month break clause after a year.
Separate reports over the bank holiday revealed House of Fraser’s Carlisle and Plymouth stores will remain open, as well as Telford and its Oxford Street flagship.
It’s understood that Sports Direct said it will be announcing more stores that will remain trading this week, but warned that time was “running out” for other locations:
“Some landlords are being very collaborative in order to give us a chance at turning the business around, giving HOF a lifeline and saving hundreds of jobs.”
“However, some greedy landlords would rather see the stores close than help save the jobs of hundreds of people. We will continue to try to convince these landlords but ultimately time is running out. Some closures will be announced next week,” said the retailer.
In response, the British Property Federation’s chief executive Melanie Leech said: “What has been taking place is negotiations between House of Fraser and its landlords – a two-party process – where each party will have its own interests and one party simply can’t cry ‘unfair’ in the media when it doesn’t get what it wants.
“Many property owners are investing in and managing property on behalf of pensioners’ savings, and depend on occupiers being able to pay rent. The long-term health of our high streets also depends on this.
“There will be a range of factors to consider on a store-by-store basis but what property owners won’t be doing is simply leaving stores empty for the sake of it, that would be in no one’s interests.”