Kendals £4.4M Rent Bill Is A Headache For House Of Fraser
House of Fraser has chosen KPMG to advise on a restructuring strategy as a company voluntary agreement moves closer.
The Chinese-owned retailer had already been in discussions with landlords to reduce its rent bill, Retail Gazette reports. The move follows the collapse in March of a £40M fund-raising package from turnaround specialist Alteri.
The rent due on House of Fraser's former Kendals store at Deansgate, Manchester, is among the priciest — and forging a deal with its Jersey-registered private owner will be crucial to the success of a CVA.
When the 388K SF block's owners offered the property for sale in December 2016 at a price of £84.5M, the annual rent was quoted by sales agent Savills at £4.36M with 33 years left on the lease. That amounts to a total rent liability of £135M, plus reviews.
Land Registry data shows the store at 98-116 Deansgate did not sell in 2016: the owners since 2007 are two Jersey-registered companies backed by loans from Investec Bank. They acquired the block for £75.9M. In 2012 they agreed to extend the terms of the lease with House of Fraser. Before variation the lease was 35 years from 2004.
Last month owner Nanjing Xinjiekou Department Store said it was selling a majority 51% stake in House of Fraser to Wuji Wenhua, a Chinese tourism group.