UK FASHION retailer Monsoon Accessorize has written to its landlords offering to pay rent on a monthly basis rather than three months in advance because of the difficult trading environment.
Other retailers have also sought a reduction in rents and a revised payments system as a result of the fall-off in consumer spending. The requests have been turned down by some landlords, while others have sought financial information on the company’s trading position before making a decision.
Some retail experts are suggesting that if Monsoon is successful in introducing monthly rents, then it could have a major knock-on effect on the retail industry.
Monsoon has more than 400 stores in the UK and 21 in Ireland. A spokeswoman said she understood the letter to UK landlords proposing the changes in the rental payments had also been sent to Irish landlords.
However, one of the company’s Irish landlords said he had not yet received a copy of the letter but, as he believed the Monsoon business was highly profitable in his building, he did not forsee the need for changes in the three- monthly advance rental payments.
Monsoon Accessorize reported pre-tax profits from its Irish stores of €5.6 million in the year to the end of August, 2010.
Moonsoon’s main Irish outlet is on Dublin’s Grafton Street where it outbid several other overseas traders in 2004 to lease the former AIB bank premises at a rent of €750,000 per annum. It subsequently opened branches in Dundrum Town Centre, Jervis Shopping Centre, as well as in most provincial cities.
Eoin Feeney of BNP Paribas Real Estate said there was anecdotal evidence that in cases of new lettings landlords were happy to accept monthly rather than quarterly rental payments in advance. There were also indications that landlords were accommodating existing tenants who were experiencing trading difficulties.
The Monsoon letter, sent by the group property and development director Ian Brown, and seen by Property Week magazine, described the landlords’ request for rent to be paid quarterly as an “archaic practice” that “is out of line with the operation of a modern retail business”.
Brown said cash flow was more important than ever and the single outflow of money on a quarterly basis was a fundamental issue. Consequently, it was in the interests of both landlords and tenants to ensure that retailers were able to function in the most efficient and effective way possible.
