Company Voluntary Arrangement
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Real estate investment firm Hammerson has reported an 11.2% drop in net rental income for 2019 to ?308.5m, from ?347.5m in the previous year, affected by the difficult retail environment in the UK.
Hammerson's pre-tax losses rose to ?573.8m, up from ?173.3m in 2018. The firm said occupancy of retail spaces continued to be high at 97.2% - the same as in 2018.
A total of 234 units had been affected by tenant restructuring since January 2018, but almost half of those shops had agreed company voluntary agreements and were now paying their original rents, with no increases.
Hammerson said it was reducing its debt, aided by stronger performances in France and Ireland, and that there was an increased appetite for premium outlets.
"We have taken decisive action over the past 12 months to reduce debt and significantly reshape the portfolio. Against a challenged retail and investment backdrop, we have exceeded our 2019 disposal target, exited the retail parks sector as we said we would and reduced debt by a third," said Hammerson's chief executive David Atkins.
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Sky News is reporting that Mothercare is finalising a radical restructuring plan under which its British operations will be placed into administration this week. It said the company, which is now dominated by its franchising business outside the UK, has put administrators on standby to take over its domestic division within days.
Richard Lim, chief executive of Retail Economics, said: “This is perhaps one of the most highly anticipated collapses on the high street. The retailer was already on life support having conducted a CVA [Company Voluntary Arrangement] last year.
"The cost-cutting operation and disposal of assets have not gone far enough to revive plummeting profits. Years of under investment in the online business and its inability to differentiate itself as a specialist for young families and expectant parents as been the root of its seemingly inevitable downfall.
"As competition has become fiercer they have been beaten on price, convenience and the overall customer experience.
"Put simply, they have been left behind in today's rapidly evolving market and the board has been unable to restructure the business fast enough to cope with a new retail paradigm that has emerged."
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Sky News is reporting that Jessops, the high street camera chain, is making plans to call in administrators.
Peter Jones - of Dragons' Den - bought the brand in 2013.
JR Prop Limited, which manages Jessops' leasehold property estate, has filed a notice of intention to appoint Resolve, a restructuring advisory firm, as administrator, Sky News reported.
It reported that if the administration is confirmed, Mr Jones is expected to seek to agree a Company Voluntary Arrangement (CVA) with creditors that would lead to store closures and rent cuts.
By Jill Treanor
Business reporter, BBC News
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Hammerson, which owns shopping centres such as Silverburn in Glasgow (pictured), has published half year results showing a loss of ?320m loss, compared with a ?56m a year earlier.
The loss as largely driven by a ?423m revaluation on its property portfolio in the first half
One of the issues it highlights is the impact of retailers using Company Voluntary Arrangements (CVAs), which allow them to keep trading while reducing their rent. It says ten of its retailers undertook a CVA or went into administration affecting 45 units. In total, since the beginning of 2018, 100 units have been impacted by CVAs or administrations, of which 74% are currently trading.
It's not all bad news: "Whilst tenant restructuring can reduce income and occupancy, it also provides opportunities to introduce new brands and improve the tenant mix at our destinations as landlords receive a break option where rents are reduced under a CVA".
Hammerson shares were slightly higher, following the announcement.
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Arcadia's creditors backed a restructuring of the Topshop to Burton group earlier this week. That sparked one of the investment trusts with exposure to Sir Philip Green's retail empire to try to reassure investors about the impact on its financial position on Friday.
NewRiver REIT (real estate investment trust) said that its rental exposure is limited to ?363,000, which represents 0.3% of its gross income, and that there will be no reduction to this rental income as a result of the restructurings.
Creditors, including landlords, backed a series of Company Voluntary Arrangements which will trigger the closure of 48 stores and rent reductions on others.
NewRiver says it specialises in buying, managing and developing retail and leisure properties throughout the UK. Its shares, part of the FTSE 250, are up 1% at 191p but were trading above 230p a month ago.
BBC Radio 4
Why did the landlords back the Arcadia deal?
Melanie Leech, chief executive of the British Property Federation, told BBC Radio 4's Today Programme that landlords are "quite often caught between a rock and hard place".
Landlords will want Sir Philip Green to "deliver on his promise that [he's] going to get on with the job. They will want to see and believe that there is a fair and credible turnaround plan for the business... and that the management and the ownership is committed to it".
Intu - the shopping centre owner - was the landlord which voted against the deal and Ms Leech said she understood concerns about different terms being offered to different tenants. She added, though, that retailers, did not want to be next to "dark shops".
"No body wants to be trading next to an empty shop," she said.
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Arcadia's biggest landlord, Intu, has revealed that it voted against a deal to save the Topshop empire.
The firm - which owns Lakeside shopping centre, the Trafford Centre and Manchester Arndale - said: Our rationale for this vote is clear."
"We firmly believe that the terms of the Arcadia CVA are unfair to our full rent paying tenants and not in the interests of any of our other stakeholders, including Intu shareholders and the 130,000 people whose jobs rely on the success of our prime shopping centres.
"While we are disappointed with the outcome of today’s vote, we will work constructively with Arcadia to achieve the best outcome for both sides."