Shopping centre landlords who have been struggling this quarter could be likely to follow tenants such as Game into administration warns Adams & Remers.
Joe Covill, partner in the commercial property team at Adams & Remers comments: “I think we are now going to see some struggling shopping centre landlords also going into administration as the Game administration will leave a cumulative £21 million hole in their finances and many just won’t be able to recover.”
“Shop vacancies have hit a record high at 14.6%*. To put it bluntly this oversupply is going to become a big headache for landlords.”
“Sadly the second quarter for 2012 isn’t looking much better either as today’s news combined with ongoing restructuring, such as the closure of 180 Thornton’s stores taking place between now and 2014, is going to leave many landlords with a considerable amount of empty or heavily discounted space.”
“Many landlords already have difficulty with their own loan arrangements and banks are currently being swift to put pressure on landlords at the moment and want to know what they are doing to improve their position. Landlords need to be watchful that they are following the terms of their loan agreements or take appropriate advice if they are in danger of breaching them.”
Joe Covill concludes: “Landlords may be looking to sell a shopping centre and the loss of tenants can lead to a reduction in price and the landlord may be required to provide rent guarantees or top ups which can make a material reduction in the proceeds of the sale and the ability to repay their bank upon the sale. It shows the importance of getting a new letting signed up quickly.”