18th May 2018
CVAs 'Have to Stop': Leading Landlord Calls For Action
A leading UK shopping centre and retail park manager has written an open letter calling on the BPF and government to halt the increasing use of CVAs on the day Mothercare became the latest household retail name to propose using the process to close stores and reduce rents.
This morning Mothercare announced plans for a CVA that would see 50 stores closed as part of a major restructuring of the business.
In a letter seen by CoStar News, Chris Geaves, Chief Executive of Sovereign Centros, has written to the BPF calling for action.
He writes: "As chief executive of a successful and very active asset management and development management business where we have circa £2bn - £3bn of retail assets under management, we as are a number of landlords, extremely concerned at the lack of activity by the government in taking any action against retailer companies using the CVA process as a loop hole to break binding lease commitments.
"Driven by firms of accountants for their own fee income benefit, the CVA process is becoming a daily occurrence which needs to be halted. The breaking of legally binding commitments and “dumping" stores without any recourse makes a complete mockery of the whole legal system when a retailer signs a lease.
"What makes it worse is that more often than not these retailer companies are profitable in their own right, but are using the CVA process to “dump” the less profitable or problematic stores. Many of the retailers will have taken financial incentives along the way as contributions to fitting out stores and none of this money ever comes back to the landlord."
The letter points to growing discontent among landlords about the use of CVAs by retailers.