Landlords will shoulder the financial burden of River Island’s restructuring
Landlords will shoulder the financial burden of River Island’s restructuring plan, say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “The High Court’s approval of River Island’s restructuring plan offers a temporary reprieve for the troubled retailer, but for landlords the verdict means taking on a financial burden.”
He added: “The plan, which includes closing 33 stores and slashing rents in some cases to zero across 71 others, will now be imposed. While River Island avoids imminent administration, landlords face a significant reset of their income and asset values.”
Mark said: “Increased staffing costs due to the National Minimum Wage and National Insurance Contributions (NIC) rise are not only impacting employers, but also the landlords they rent their premises from. Today’s ruling confirms that commercial landlords are being asked to take a big financial hit for retail survival.”
He added: “The implications are severe. Rent reductions will flow through property portfolios, undermining valuations and complicating any refinancing efforts. While landlords may appeal, the cost and uncertainty of doing so may outweigh the potential gains.”
Mark said: “This verdict further highlights the need for government intervention. Sector specific support such as rates reform, VAT reductions, and NIC holidays could help stabilise the retail sector. Without it, landlords may find themselves absorbing losses with little recourse, even as retailers struggle forward.”