Beales asks landlords for 70 per cent rent cut

The remaining 24 stores – including its flagship site in Bournemouth – will have rent paid monthly

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The Independent Online

Beales, the struggling department store chain, is asking some of its landlords to cut rents by 70 per cent in an effort to keep branches open.

It has entered a company voluntary arrangement supervised by KPMG that is seeking rent reductions on 14 of its stores; the firm claims some shops have been “hampered by expensive legacy leases”.

The remaining 24 stores – including its flagship site in Bournemouth – will have rent paid monthly rather than quarterly for three years.

Stuart Lyons, the chairman, said: “Most of Beales’ stores are profitable, including our flagship stores in Bournemouth and Poole which are unaffected by the proposal.

“However, a minority lose money because leases agreed some years ago are no longer sustainable due to changes in the economy and local conditions. These legacy rents have been dragging the group down. This is a unique opportunity to restore the group to financial health.”

Two of the chain’s non-executive directors – Andrew Perloff and Simon Peters – also own the company that owns the freeholds of 12 Beales stores. Mr Perloff is chairman and chief executive of property group Panther Securities. His nephew, Mr Peters, is finance director. 

Mr Perloff – who donated £17,500 to Ukip in 2014 through his company – is chairman of Beales’ remuneration committee, and a member of its nomination committee and audit committee. Mr Peters is chairman of Beales’ audit committee, as well as being a member of the remuneration committee and nomination committee and worked at KPMG as a corporate tax adviser for five years, until 2004.

Their property company has unsurprisingly agreed to support the CVA proposals, which require at least 75 per cent creditor approval to go ahead. Beales’ largest supplier, Associated Independent Stores, has also already agreed to support the proposals.

However, some of the landlords asked to take a massive haircut on their expected revenues from their freeholds may not be so agreeable. The creditors will have to vote on the CVA on 24 March.

KPMG said it will be a talking to all creditors in the next three weeks in an attempt to get the CVA off the ground.