Property review fuels fears over the future of Bhs

Exclusive: Analysts have already questioned whether the financiers and investors behind Retail Acquisitions can succeed in turning Bhs around

Bhs’s new owners have hired a property agent to review options for the loss-making group’s stores, within a day of buying the business from Sir Philip Green for £1.

News of the appointment of the specialists Jackson Criss will only heighten speculation about the long-term future of the department stores group, which employs about 11,000 people across the UK.

Analysts have already questioned whether the financiers and investors behind Retail Acquisitions, the group purchasing Bhs from the billionaire retailer, can succeed in turning it around.

“It is not a matter of finding someone with more money and management skills than Philip [Green]. This is not a turnaround,” said the retail analyst Richard Hyman. “This deal is the next stage in the closure of the business.” 

However, Keith Smith, the former City financier who is currently chairing Retail Acquisitions, has said they expect to return the group to profit. “We are convinced that with strategic and focused support we will return Bhs to profitability, and safeguard the workforce,” he explained this week.

The new Bhs owner said Jackson Criss would explore options for five properties where it holds leaseholds. Property industry sources say more of Bhs’s 171 sites will be looked at in the longer term.

Typically, retail agents will try to make property more financially viable for companies. Options often include sub-letting space, selling leases or negotiating rent prices.

Any money Bhs’s new owners can make back on real estate to help the company return to the black would be welcomed. Companies House filings show Bhs made a pre-tax loss of £69.6m last year after writing down the value of some of its stores. The buyers are, however, taking on the pension liability, believed to be £100m.

Bhs stores are located across the UK, ranging from Bournemouth, London, Blackpool, Swansea and Glasgow.

About 150 of the shops already have planning permission to sell food, potentially making them an attractive acquisition targets for food retailers.

Ahead of the deal, industry reports said in January that Bhs needed to shed between 30 and 40 underperforming stores and that Sir Philip had been trying to reduce the property portfolio to about 100 stores over the last few years.

As well as selling the shops, in a separate deal Sir Philip has offloaded the West End headquarters of Bhs to the grandson of the legendary property investor Jack Dellal.

Alexander Dellal, who is the older brother of the socialite and model Alice, paid about £40m for the building on Marylebone Road. Sir Philip bought the freehold of the building from Prudential for £31m last year.

The buyer’s grandfather “Black Jack” Dellal was a property tycoon. He had the reputation of being one of the capital’s shrewdest and most successful wheeler-dealers in the casino business during the 1960s and 1970s.

One of his most notable deals was BBC’s World Service offices, Bush House, in London. He acquired the property for a paltry £55m in 1987, and then sold it on two years later to Japanese investors Kato Kagaku for £130m.

Alexander Dellal could not be reached to discuss plans for the property.

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