Big four shopping centre landlords face 'long-term risk' from CVAs

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One fifth of shopping centre floorspace being let by the four biggest real estate investment trusts is to retailers in administration or with shrinking sales, according to new analysis by UBS.

Analysing data from 50 shopping centres owned by British Land, Landsec, Hammerson and Intu, UBS found 20% of total shopping centre floorspace is occupied by retailers already carrying out a CVA, in administration or suffering from declining sales growth.

UBS said this impact was “significantly higher than the companies’ reported rent impacted by CVAs, which ranges from 2.7% to 4.4% of rental income”.

The investment bank said this posed “long-term risks to the retail REITs, including lower rental growth prospects and higher vacancy” and could lead to a “vicious circle” of store closures, leading to “less pleasant” shopping experiences and further reduced foot traffic.

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