Commercial landlords vote to save BHS stores in CVA deal

23 Mar 2016

Policy area: Town centre & Retail

Commercial landlords have voted for a deal that will save BHS from administration, and with it thousands of jobs, but which will leave over half of landlords and their investors receiving reduced rent. 

The British Property Federation (BPF), which represents commercial landlords, has commented on the Company Voluntary Agreement (CVA), which will see 77 stores undergo no rent change, compared to 47 stores that will pay a reduced rent of 75% or 50%, and 40 stores that will just pay 20% rent. Landlords will be able to terminate such leases if they find other tenants. 

The deal could see landlords receive 6.15 – 10 pennies back to the pound. The CVA offers a better return for landlords that if it had fallen into administration, as well as seeing a greater number of stores remain open. 

CVAs must be agreed by 75% of all unsecured creditors and 50% of the unconnected unsecured creditors before they are passed.

Melanie Leech, chief executive of the British Property Federation, said: “Each CVA has to be taken on its merits, and landlords will have thought carefully about how to respond to this, and whether the proposals make a credible case for rescuing the business, or just keeping it afloat for the next couple of years. Whilst the CVA will help alleviate some of the short term pressures on the company it is imperative that the owners of the company now raise capital to reinvigorate it. 

“What we value most with CVAs is open and transparent dealings, so that landlords know exactly the parameters within which they are working. In this case, KPMG started the engagement process with landlords early, which we welcome.”