Mike Ashley complains that Landlords won't reduce their rents!!!!

Discussion in 'General Chat' started by pinnocchio, Aug 28, 2018.

  1. pinnocchio

    pinnocchio
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    House of Fraser attacks 'greedy' landlords

    While I have no love for landlords the thought of Mike Ashley accusing others of being greedy just makes me want to vomit.

    Apparently what he's offering some of the landlords is no rental income but he'll pay their business rates, if they don't accept he's saying they're responsible for putting hundreds of jobs at risk.

    Considering when he bought it for £90m the rumours are he also acquired about £300m in stock he really is trying to squeeze everyone else dry.
     
  2. Deleted member 92943

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    The guys a joke. Did he not even look into what rents House of Frasier was paying before dropping £90 million on them?
     
  3. Trollslayer

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    This is the guy who treats his employees like dirt.
     
  4. Desmo

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    I'm guessing he didn't need to seeing as he already owned 10% of them.
     
  5. davidcrofter

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    I suppose you could ask what were the alternatives for HOF and indeed the landlords given the mess of the high street currently??

    I highly doubt any landlords will have any qualms about knocking him back and going with somebody else if they think they can secure a long term deal ...

    Ashley is simply good at making his wealth work for him but unlike many others he does it very publicly and thus is public enemy number 1.
     
  6. Davidc7230

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    The thing is, who would take those propertys on if he yanked HOF out of them? Would cost a fortune to tweak them into smaller units with the hope people would move in. He has them over a barrell and is quite aware of it.
     
  7. Deleted member 92943

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    Primark are the ones who want the large department stores which HoF has. They are desperate for the one in Bluewater Kent but as of yet, they have to go next to them in unoccupied space. It just depends whether HoF are likely to stay there now or not
     
  8. krish

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    Probably won't copy Burberry's bonfire of the vanities o_O
     
  9. reiteration

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    he won't but the staff might :D
     
  10. Greg Hook

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    Right opposite the HoF at my local big shopping centre, Rushden Lakes, is already a massive Primark.

    This is a massively busy centre and HoF have the flagship store on the whole site. It would be a shame if they went but the unit they occupy would be snapped up in seconds, but I would say this would be a shoe in as one of the stores to remain.

    I do think Landlords need to come to the party though. A lot of the BHS stores are still empty after they went under, so it isn't easy to find a new tenant for a large store quickly. If you were a landlord would you rather have some rent, even if it was 50% of what you wanted rather than a building sitting empty earning you nothing.
     
  11. domtheone

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    Agreed.

    When you think about how much some of these rents are (astronomical) , it's hard to have much sympathy for the landlords.
     
  12. Davidc7230

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    This was my exact sentiments when reading about the issue Homebase are facing with landlords refusing to accept lower rates of rent. I know it isn't their problem that the company is swirling the drain, but a unit sat empty for months is going to cost them money in the long term.
     
  13. mij

    mij
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    The subprime meltdown was the sharp increase in high-risk mortgages that went into default, I wonder how many commercial mortgages are in a similar state.
     
  14. Greg Hook

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    No doubt, but if you have a commercial mortgage, surely it is worth getting some income from a property to perhaps cover the costs rather than have it sit there empty for years on end.
     
  15. hippo99

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    Unless there’s some sort of accounting fiddle that they do to offset the losses on each property against their taxes, so it doesn’t actually cost their bottom line for having empty properties. Government tax take is just lower for them.
     
  16. Desmo

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    You can offset losses from one year against profits of another year. There are time limitations but it's possible.
     
  17. nheather

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    I can see the sense but I can’t imagine that they haven’t considered it.

    I imagine the thought train goes something like this.

    We have 10 equal sized units on the site and we charge a rent of £1000 for each (clearly I have made up a number for illustration), so that is £10,000 in total.

    Company X is struggling and is likely to go bust, it is unlikely that I will get another tenant, so I’m looking at he total dropping to £9,000.

    Company X is asking for the rent to be reduced to £900 so it might try to survive. But if I do that the other nine tenants will demand the same so the total will be £9,000. And chances are, Company X will fail any way so then, I’ll be down to £8,900.

    Cheers,

    Nigel
     
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  18. Cocksure

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    Can’t say I blame the landlords, plenty of companies that have been bought out last minute, made rent deals and still go under.

    If they refuse the deal and Frasers pull out then they (Frasers) still have to cover the costs of putting the units right (undo alterations made) so as it’s ready for the new tenant. Besides cut for one and you will soon be cutting for all.

    Far better to lose a now poor paying tenant and get the unit back on the market, than take less and likely lose the tenant anyway and then have the refit costs on top as Frasers is no longer around to cover them
     
  19. Davidc7230

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    To be fair I never considered it that way.

    But in this age of online shopping slowly killing the high street off, how quick would those units be filled? I should imagine most House of Fraiser stores are huge. As for Homebase they got lost in the shuffle, B&M The range did to that sector what the discounters are doing to the supermarkets.
     
  20. Cocksure

    Cocksure
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    Like everything its location, location, location. Letting to another huge store is unlikely as things are going more online, so sooner or later anyway the landlords are going to have to split the property into smaller units on the ground floor and change the upper floors to small offices or flats etc.

    Town centre flats go for very good money, which then makes it attractive to small shops/restaurants etc that services those flats etc. Retail rents are down 50% on what they were 10 years back, where flats, town centre offices like solicitors etc are on the up.

    look at m&s that have announced a 100 store closures, sooner or later Frasers will do the same, so might as well make the changes now and move into the new market whilst the demand is till there

    Edit
    Thinking about it, this is a very good way for Ashley to close the least profitable stores, “it’s not my fault your being laid off but the landlords etc” win win either way for him. For the landlords who are already disliked by many it’s just water off a ducks back. Being my cynical self, this is just all an excuse for mass store closures
     
    Last edited: Sep 1, 2018
  21. Doug the D

    Doug the D
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    I'm not that sure that the managers working in a retail park/ shopping centre would stand around gossipping about what rent their employer pays, i.e. I highly doubt that the managers of my local PC World and Pets at Home would even know what rent their respective organisations pay. I really don't think it would be common knowledge amongst those on the shop floor. I also doubt that all units pay the same in the first place. Plus, wouldn't a business be expected to sign some sort of non-disclosure agreement about their rental contracts? I know that residential homes don't have to, but I would find it strange that businesses don't get told to keep schtum about such things...

    I guess the bottom line is that Mike Ashley, whatever people think of him, is trying to make money. He's a businessman. I don't ever recall him trying to kid anyone that he's anything else. If, by making a public statement about the need to lower rental costs, he is even partially successful, then that's more money in his or his business' pocket.
     
  22. pinnocchio

    pinnocchio
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    I don't think anyone doubts he's in it to make money, however coming across as a thoroughly unpleasant frack is no way to maximise your business in a retail sensitive environment.

    I personally wouldn't walk into a Sports Direct if you paid me.....because he clearly has no regard for anyone, staff, customers, suppliers, etc... if they don't do what he wants. Why would I put money in his pocket, cheap sports wear is everywhere.

    However if you look at someone like John Lewis, and no I'm not saying they're perfect, but at least the company philosophy is about trying to provide a quality service in a pleasant way and treating staff, suppliers and all their partners in a mutually conducive manner.

    The thought that a tw*t like Ashley could successfully manage a 'Top Line' retail environment when his attitude and existing stores screams 'stack em high and sell em cheap and maximise the unpleasant' is laughable to me.
     
  23. Doug the D

    Doug the D
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    Do you think that everyone you see around you in a branch of Sports Direct feels the same way? Some people (myself included) don't actually consider how staff are treated by their employer when purchasing a product - I don't think I'm in the minority with that view either. If we all did research into staff satisfaction wherever we shopped, we'd probably just stay at home and grow our food in the garden...

    Does Sports Direct treat it's staff well? No. Does anyone ever join Sports Direct with a long-term career strategy in their back pocket, or is it just a bit of a simple job to get you by until the next one? I think it's the latter.
     
  24. Cocksure

    Cocksure
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    The retail parks are unlikely to be the places where he is trying to haggle the landlords down as they do let with easy. Its the town centre locations he will be trying it on. Whilst normally it is unlikely you would know what your neighbour is paying, the trouble is that he has made it all very public, so whilst the neighbour may not know how much the rent has dropped by, you still know that the likelihood is that it has dropped. Nothing you can do to your contract ends granted, but most shops have an early release after x years clauses, so you just use the info then. Its just building up future problems for the landlord.
     
  25. nheather

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    Agreed under normal situations. But the reason we are discussing it now is that Mike Ashley asking for rent reductions is in the public domain.

    So company Z may not know what company X and Y are paying but if they see in the news that company X has got a reduction I am in no doubt they would be speaking to the landlord pretty shortly after.

    Cheers,

    Nigel
     
    Last edited: Sep 1, 2018
  26. hippo99

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    If nothing else, that landlord is going to find it very hard to increase the rent for other neighbouring shops when everyone knows HoF next door is paying (equivalent) less than them.
     
  27. TerFar

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    I see the otherside too. The High Street is up the creek. The combination of the on line model and out of town stores have hit the value and sense of running High Street mega stores. So the property value and hence the rents should fall. Property owners need to face up to the inevitable: either they share lowering of costs of operating in the High Street or it's doomed.
    I have no love fof Ashley though; it's tough to agree with him!
     
  28. Deleted member 92943

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    The high street is completely up the creak. The future is mainly going to have to be about experiences, like cinema and dining, not shopping which as each year passes will be more and more online.

    Amazon pretty much have the online monopoly and that isn't going to change.
     
  29. Stiggy

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    No specific disrespect to landlords, but I suspect their business model is the same as a lot of UK companies; charge as much as you possibly can until the market collapses.

    If it’s anything like the domestic rental market, the current prices are unsustainable, especially in the south east.
     
  30. DarenD

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    He's offering to pay their rates which is usually more than the annual rent of the building. I know the unit we rent is x1.5. So if your a landlord of a property and the business fails not only do you get zero rent but your also now responsible for the empty buildings rates aswell
     

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