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UBS: Research Shows Potential CVA Impact on Landlords

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Analysis by UBS has shown that 20% of the shopping centre floorspace owned by British Land, Hammerson, Intu and Landsec, is currently let to retailers who are in administration, undergoing a CVA or experiencing declining sales growth. 

The financial services firm and investment bank analysed data from 50 shopping centres, 1,477 retailers and 5,666 stores, noting that the figure was “significantly higher than the companies’ reported rent impacted by CVAs, which ranges from 2.7% to 4.4% of rental income”.

UBS predicts that the four landlords referenced will experience a further 20% decline in the valuations of their centres over the next two to three years. 

UBS' Head of European Real Estate, Osmaan Malik, said: “The big unknown is the hits to the rental income," adding, "All of the retailers [could] decide ‘we’re going to go through CVAs, we’re going to cut our rents or we are going to move out of the centres that we don’t want to be in’, so it’s very difficult to judge.”

UBS added that retailers who were struggling may well return for a 'second bite', seeking rent reductions or closing stores completely.

Source : Insight DIY Team and UBS

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31 May 2019

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