IPD: Administrations in the retail sector affect 0.5% of UK commercial property income stream (UK)

The recent spate of administrations in the UK high street could wipe out up to £393 million of rent payments to UK landlords over the course of their leases. The current annual rent payments from these retailers represent 0.5% (£35.8 million/€40.4 million) of the £7.2 billion annual income stream recorded by the IPD quarterly universe.

Companies that have gone into administration recently – Focus DIY, Habitat, Homeform Group, Jane Norman, Oddbins and TJ Hughes – have lease commitments of between five and 12.5 years. These commitments average 10.8 years across all of the IPD quarterly dataset.

Malcolm Hunt, Director and Head of UK and Ireland Client Services at IPD said: "The total annual cost to landlords of these administrations could be as high as £35.8 million based on IPD data. Obviously some of these costs can be mitigated through reletting, as was found following the demise of Woolworths and MFI.

Only 16% of property funds could lose more than 1% of their income stream as a result of these corporate failures. The two most important retailers affected are Focus DIY and TJ Hughes with potential total impacts over the lifetime of their leases of up to £231 million and £94 million respectively."

In addition, restructurings have been announced at other retailers, including Carpetright, HMV, JJB Sports, Thorntons and Mothercare. Altogether, IPD records annual rent bills of £153 million for these companies, with an average lease commitment of 9.2 years.

Source: IPD

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