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Jjb Sports' Landlords Angry Over Store Exit Plans

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Landlords have reacted with fury after JJB Sports proposed dumping unprofitable stores on them as the retailer warned it could go into administration unless it finalised a restructuring plan.

JJB Sports said it had identified 45 shops that were "significantly underperforming" and would be looking to close, as well as putting a further 50 stores under review for closure within two years.

The British Property Federation (BPF) said landlords of JJB Sports stores were concerned by the company's announcement, which marks the second time in two years the company has used a so-called company voluntary agreement (CVA) to get it out of tenancy agreements for shops that are no longer making money.

"What has concerned landlords are past cases where a retailer had released a store through a CVA and then returned to the same locality shortly afterwards to take a new store on reduced rent," said Liz Peace, chief executive of the BPF.

In a statement to the market on Friday, JJB Sports said its "future viability" was dependent on successfully reaching an agreement on a CVA and warned that unless this was agreed the company could be forced into administration.

JJB Sports is currently hoping to raise £31.5m in new money from its existing shareholders to keep the business going, as well as holding talks with larger rival JD Sports on a possible takeover.

Without the new money, JJB Sports only has enough working capital to keep operating until late March.

"The board and management team are working urgently on a fundamental restructuring plan which will significantly strengthen JJB's finances and build on the group's strengths. We are confident that, with the support of our key stakeholders, we can complete this restructuring in the coming weeks," said Mike McTighe, chairman of JJB Sports.

Getting an agreement on the CVA will require the support of at least 75pc of the company's unsecured creditors and more than 50pc of its shareholders.

Shareholder support for the capital raising will be sought at an extraordinary general meeting next week and five of the company's top five shareholders are understood to have agreed to back the deal.

Shares in JJB Sports closed down nearly 4pc at 4.35p on the news of the property restructuring plans, valuing the company at about £28m.

I think I just shed a tear. :lol:

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Maybe the landlords could run some businesses from their overpriced locations instead - no thought not.

One way to fix this parasitic relationship that exists between businesses and property sitters is to make leases assymetric - long lock-ins for the landlord and freedom to move on a yearly basis for the renting company. Make the amount charged negotiable on a yearly basis then the rents can track demand, ability to pay and general economic climate. Landlord starts to take the piss then the building is left empty.

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I don't understand the landlords' anger. Surely they understand that a tenant cannot trade indefinitely if it is losing money? They have two choices, reduce the rent or have an empty building.

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I don't understand the landlords' anger. Surely they understand that a tenant cannot trade indefinitely if it is losing money? They have two choices, reduce the rent or have an empty building.

They are upset becuase they are parasites that believe they are running the market (which they have, a lot in collusion with their peers), not running in the market. They bid up the price of commercial propeorty - it makes their existing property look lilke it is worth more and then try and screw commensurate rents out of the system. Commercial version of the Wilsons.

Edited by OnlyMe

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I don't understand the landlords' anger. Surely they understand that a tenant cannot trade indefinitely if it is losing money? They have two choices, reduce the rent or have an empty building.

+1

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Also they want to lock the incumbents into the existing rental deals - no dice it is uneconomic for them to do so, yes JJB were stupid to sign the deals, so were the landlords to expect the level of rent from the type of business that is being run there - failure both sides.

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They are upset becuase they are parasites that believe they are running the market (which they have, a lot in collusion with their peers), not running in the market. They bid up the price of commercial propeorty - it makes their existing property look lilke it is worth more and then try and screw commensurate rents out of the system. Commercial version of the Wilsons.

"What has concerned landlords are past cases where a retailer had released a store through a CVA and then returned to the same locality shortly afterwards to take a new store on reduced rent," said Liz Peace, chief executive of the BPF."

laugh.giflaugh.giflaugh.gif

But no, like house prices, rents have to be kept high to sustain the value of the underlying asset and are fixed in stone at boom levels or at whatever crazy price the landlord bought for,. You couldn't make this stuff up honestly!

If the rentiers go bust faster than the retailers it will be a damn good thing. Won't happen of course.

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"What has concerned landlords are past cases where a retailer had released a store through a CVA and then returned to the same locality shortly afterwards to take a new store on reduced rent," said Liz Peace, chief executive of the BPF."

laugh.giflaugh.giflaugh.gif

But no, like house prices, rents have to be kept high to sustain the value of the underlying asset and are fixed in stone at boom levels or at whatever crazy price the landlord bought for,. You couldn't make this stuff up honestly!

If the rentiers go bust faster than the retailers it will be a damn good thing. Won't happen of course.

I suspect you are right - the high streets are going to be littered with empty shops then.

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As the internet based economy continues to pick up, the 'value' of these high street shops should continue to fall and the rent demanded should decrease. However, there is little chance of LLs picking up on this as they continue to demand their exorbitant rents. Lets hope they get left with empty shops as more customers and retailers move online.

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I don't understand the landlords' anger. Surely they understand that a tenant cannot trade indefinitely if it is losing money? They have two choices, reduce the rent or have an empty building.

Thousands of businesses go under (inc pub trade) coz of unrestricted "rents only ever go up" landlords.

The banks love it coz the next suckers come along (in a bubble market at least) to start a small shop business/restaurant.

The banks know they can get the owners to sign away everything, including their homes to get a loan, once trading goes downhill and all they work 120+hrs a week for is to pay off the vultures, bankers, solicitors and landlords!

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What a contrast though. JJB shares are 4p. Whilst ASOS shares, an online online fashions retailer hit new highs at £18+ each.

If we want to recover, and soar, we need to remove these encumbrances! Car parking charges, high business rates, high rents, red tape etc...

Edited by Money Spinner

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Lower rents = more competitive businesses = more employment = more tax revenue + lower benefit payouts = lower deficit = lower long term tax rates and interest rates = more competitive businesses + more consumer spending = recovery.

Edit: In summary, lower rents / property prices = recovery.

Edited by fellow

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The high street is dying and there is no going back. The internet is the future not only can you find the item in the colour, size you want without traipsing around a town full of idiots but you also get the best price all from the comfort of your own home.

The situation is only going to get worse for high street shops as the technically challenged generations are either dying off or learning to use the internet.

I don't feel sorry for landlords as the prices they charge are frankly obscene and unsustainable.

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Lower rents = more competitive businesses = more employment = more tax revenue + lower benefit payouts = lower deficit = lower long term tax rates and interest rates = more competitive businesses + more consumer spending = recovery.

Edit: In summary, lower rents / property prices = recovery.

+1 This really is all we need (and LVT). It'd be better to take a year or two of pain, get all the problems out of the way quickly, then recover. Unfortunately, that doesn't look like it's going to happen.

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There will be a high street of some sort. People still need to trawl around shops after they done their shopping online. It just needs to find a much lower cost base. Perhaps some 90% lower from here. JJB can't carry the burden of paying for trampoline co-ordinators, and funding a new Bentley Continental GT, each year for the landlord, no more.

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The high street is dying and there is no going back.

I would say around 30% of the shops in my local High Street are empty now, around half a dozen didn't re-open in the New Year and I imagine many of the others are in their death throes.

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Someone tell the landlords where any money from reduced rents might go:

JJB Director's total remuneration

2010 £2,593,000

2009 £1,291,000

"The Committee determined that the targets had all been met and therefore the Executive Directors were each

entitled to a bonus of 100% of annual basic salary."

http://www.jjbcorporate.co.uk/pdf/reports/2010%20-%20Annual%20Report.pdf

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I'm torn on that one, on one hand I deplore over inflated salaries for executives, but, I also deplore over inflated rent demands.

But which one's worst? There's only one way to find out:

FIGHT!!!!!!!

;)

Seriously though, in this case I think the landlords and the JJB executives are as bad as each other.

Edited by Fishbone Glover

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I'm torn on that one, on one hand I deplore over inflated salaries for executives, but, I also deplore over inflated rent demands.

But which one's worst? There's only one way to find out:

FIGHT!!!!!!!

;)

Seriously though, in this case I think the landlords and the JJB executives are as bad as each other.

its a walkover

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What a contrast though. JJB shares are 4p. Whilst ASOS shares, an online online fashions retailer hit new highs at £18+ each.

If we want to recover, and soar, we need to remove these encumbrances! Car parking charges, high business rates, high rents, red tape etc...

The successful model provides no free parking at all, there.

There's also no evidence that cheap (ie subsidised) parking results in more successful businesses - in fact the reverse is usually true; a town that offers free parking is usually a town that's a skanky dump.

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  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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