House of Fraser property plan details emerge

Some are being asked to sign rent-free deals while others are being offered rent equivalent to 5% of store turnover, according to the BBC.

Sports Direct tycoon Mike Ashley, who had long harboured ambitions to own a department store business, hopes to keep most branches open but has been seeking new deals on properties.

Landlords have been offered three options.

A small number would receive the same rent as before House of Fraser’s administration. Just under half may be offered 5% of turnover deals, including service charges and may be offered “rates”-only deals.

In the latter instance, the arrangement, would cover a two-year period and there would be a three-month break clause after 12 months.

According to property industry body Revo, the proposals represent the least worst option.

The organisation told the BBC: “The purchase of HoF is a far better outcome than the CVA for employees, customers, other retailers and typical pensioners who are invested in the real estate through their shares in the landlords or their pension funds.

“It also shows there remains strength in the department store sector and Mike Ashley will want to prove he can turn this business around”.

A retail property source said: “A lot of these landlords will be staring down the barrel. They probably don’t have a plan B so some will think this is quite attractive.

“They continue to trade, without the burden of business rates which gives them at least a year to come up with a plan. If the stores trade successfully, then there’s always the possibility of a better deal with Ashley down the road.”