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• Retailers push for urgent action on rent reviews

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  Helena Deane    Group moderator

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  Retailers push for urgent action on rent reviews

  Retailers are stepping up pressure on the government to introduce a retrospective ban on upward-only rent reviews as a growing number of shops face closure.
  
  Dozens of leading retailers started an e-mail campaign to politicians last week, expressing support for a Labour Party private member’s bill which would permit downward reviews of commercial rents on existing leases. Retailers have said that rent increases, mainly applied by institutional landlords, cannot be sustained in the current trading environment.
  
  Bookseller Hughes & Hughes, which went into receivership ten days ago, partly blamed its failure on high rents. Clothing chain Bestseller, which is in examinership, is also blaming rents for its decision to close several Vero Moda and Jack & Jones stores.
  
  Since last Monday, new commercial leases cannot include an upward-only rent review clause. However, there is disagreement about whether such a move could be applied retrospectively.
  
  Industry body Retail Excellence Ireland (REI) has engaged lawyers to put together a case to support its position that existing upward-only rent reviews can be banned. This legal argument will be put to Dermot Ahern, the Minister for Justice, who has responsibility for the area.
  
  David Fitzsimons, chief executive of REI, said that as many as 40managing directors of retailers would attend the debate on the Labour Party private members bill on Tuesday and Wednesday. He said these directors were employers of 10,000 retail workers.
  
  The bill has been tabled by Labour Party TD Ciaran Lynch, who said that the ‘‘crippling cost of commercial rents’’ was a huge factor in the difficulties facing many retail outlets. ‘‘Rent s that were negotiated at the height of the economic boom are simply no longer sustainable, given the downturn in the economy and reduced consumer spending," said Lynch.
  
  Ahern last week established a working group to examine commercial rents. It will also look at the arbitration process and the information available regarding commercial rent reviews, as well as making recommendations for change.
  
  The group is due to report by the end of June, but Fitzsimons said that June would be too late for many retailers.
  
  The recession claimed another high street victim last Friday, when a liquidator was appointed to Jean Scene, a clothes retailer that operated 30 outlets at its peak. However, it closed a number of outlets over the last 18 months and was operating 16 stores prior to its liquidation.
  
  Creditors of the company have been left nursing debts of more than €2 million, according to a statement of affairs circulated to creditors. The Revenue Commissioners are owed €346,000 and staff are owed €112,000.
  
  Declan McDonald, an accountant with PricewaterhouseCoopers in Dublin, was installed as liquidator to Jean Scene. The business is owned by brothers Raju and Sunny Tulli.
  
  (Sunday Business Post)
  
  • 09 Mar 2010, 2:35 pm
  Helena Deane wrote: > Retailers are stepping up pressure on the government to introduce a > retrospective ban on upward-only rent reviews as a growing number of > shops face closure. > > Dozens of leading retailers started an e-mail campaign to politicians > last week, expressing support for a Labour Party private member’s > bill which would permit downward reviews of commercial rents on > existing leases. Retailers have said that rent increases, mainly > applied by institutional landlords, cannot be sustained in the > current trading environment. > > Bookseller Hughes & Hughes, which went into receivership ten days > ago, partly blamed its failure on high rents. Clothing chain > Bestseller, which is in examinership, is also blaming rents for its > decision to close several Vero Moda and Jack & Jones stores. > > Since last Monday, new commercial leases cannot include an > upward-only rent review clause. However, there is disagreement about > whether such a move could be applied retrospectively. > > Industry body Retail Excellence Ireland (REI) has engaged lawyers to > put together a case to support its position that existing upward-only > rent reviews can be banned. This legal argument will be put to Dermot > Ahern, the Minister for Justice, who has responsibility for the area. > > David Fitzsimons, chief executive of REI, said that as many as > 40managing directors of retailers would attend the debate on the > Labour Party private members bill on Tuesday and Wednesday. He said > these directors were employers of 10,000 retail workers. > > The bill has been tabled by Labour Party TD Ciaran Lynch, who said > that the ‘‘crippling cost of commercial rents’’ was a huge factor in > the difficulties facing many retail outlets. ‘‘Rent s that were > negotiated at the height of the economic boom are simply no longer > sustainable, given the downturn in the economy and reduced consumer > spending," said Lynch. > > Ahern last week established a working group to examine commercial > rents. It will also look at the arbitration process and the > information available regarding commercial rent reviews, as well as > making recommendations for change. > > The group is due to report by the end of June, but Fitzsimons said > that June would be too late for many retailers. > > The recession claimed another high street victim last Friday, when a > liquidator was appointed to Jean Scene, a clothes retailer that > operated 30 outlets at its peak. However, it closed a number of > outlets over the last 18 months and was operating 16 stores prior to > its liquidation. > > Creditors of the company have been left nursing debts of more than €2 > million, according to a statement of affairs circulated to creditors. > The Revenue Commissioners are owed €346,000 and staff are owed > €112,000. > > Declan McDonald, an accountant with PricewaterhouseCoopers in Dublin, > was installed as liquidator to Jean Scene. The business is owned by > brothers Raju and Sunny Tulli. > > (Sunday Business Post)