New Look requires backing of half of large landlords to pass CVA

A property source with understanding of the ongoing negotiations between New Look and landlords told Retail Week the fashion retailer will need to convince at least half of the largest institutional landlords and shopping centre operators to back the deal or it could fail. 

“Of the smaller landlords, New Look will likely get 90% to vote yes, because they understand the alternatives,” he said.

“With the larger landlords, if you were to take the top 20 by size, if they got 10 of them then they’re probably in a good place. If they don’t, it’s probably going to come down to quite a fine margin.” 

A list of institutional landlords involved in the CVA include: British Land, M&G, The Crown Estate, Hammerson, Aberdeen Standard, Unibail-Rodamco-Westfield and Intu. 

On the looming CVA vote deadline, which is set for September 15, the source called it a “landlords’ vote” because retail property owners have more than £360m worth of voting rights, by far the largest collective creditor bloc. 

A number of landlords have raised concerns over the proposals, including New Look’s requests to set future turnovers to wider marketplace estimated rental values. However, the source said he was “intrigued” as to why some won’t vote in favour.

“Ultimately, if large landlords don’t like the deal, they’ve got four chances in three years to do something about it, by serving a break,” he said. 

“Meanwhile, they get income, they get service charges paid, they’ll get arrears paid and the lights stay on. It’s always easier to market a full property than one that’s empty.”

While some landlords have also expressed doubts about just how perilous New Look’s position is, the source warned that “the alternative here is Armageddon”. 

Since New Look first launched its CVA proposal, it has faced severe criticism from the likes of the British Property Federation and from individual landlords. 

A number have criticised the retailer over a lack of transparency and questioned the precedent such a move would set for other struggling fashion retailers in the future should it be pushed through. 

Over the weekend, The Mail on Sunday reported that as many as 10 institutional landlords and shopping centre owners had decided to vote against the proposal ahead of next Tuesday’s crunch decision. 

New Look launched its CVA on August 26, asking landlords to switch to turnover-based rents of up to 12% for 402 of its stores, and to move the remaining 68 to nil rent.