Boots stops paying some landlords as it seeks post-Covid rent deals

Pharmacy giant Boots is the latest major retailer to become embroiled in rental disputes with its Irish landlords as the damaging effects of the coronavirus pandemic and lockdown continue to take their toll on the retail sector.

Boots Ireland confirmed it had stopped paying rent to some of its main Irish landlords as it was seeking new deals following the pandemic.

It is now facing at least two lawsuits, after Dublin shopping centres – Omni in Santry and Charlestown near Finglas – initiated action against it in recent weeks.

Boots joins a growing list of high-profile retailers in disputes with Irish shopping centres and institutional landlords, including shoe brand Schuh; fashion retailer New Look; Topman; jeweller Fields; Reiss designer boutique; and Mike Ashley's Irish department store chain, Heatons.

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“Since March, Boots Ireland has remained committed to keeping stores open to ensure that pharmacy, healthcare and essential products are available to communities across the country at a time when they are needed the most. This is despite the fact that the Covid-19 pandemic had a negative impact on our business,” said Boots Ireland, which has about 90 outlets here.

Boots said it contacted a number of its Irish shopping centres and other landlords seeking breaks on its rent and service charges “in light of the Covid-19 pandemic and its impact on our business”.

“At this time, we paused some payments whilst discussions were ongoing. We wish to work together with our landlords to reach fair agreements that support Boots as one of Ireland’s essential businesses at this time.”

Long-term future

It said deals with landlords would help to maintain “the long-term future” of the business.

Boots' move to "pause" some payments led Omni, owned by wealthy private clients of Goodbody stockbrokers and the family of builder Sean McKeon, to file a High Court action last month seeking a summary judgment in a debt claim.

This is an aggressive legal move where the plaintiff seeks a ruling without trial because, it claims, the respondent has no arguable defence.

Boots is facing a similar action from Charlestown Shopping Centre near Finglas, control of which was bought from the National Asset Management Agency by businessman Ronan Barrett. Boots has not yet filed a defence to either legal case and may yet dispute the claims.

Charlestown is also suing Heatons in a debt row over rent. Heatons recorded a near €27 million onerous lease provision in its accounts in recent months.

The Jervis Centre in Dublin is suing Schuh, Fields, Topman and New Look, one of the anchor tenants in the scheme. Meanwhile, insurer and institutional investor Aviva is suing fashion designer David Reiss, who operates in Dublin from a store on St Stephen’s Green.

‘Surviving’ crisis

Retail Ireland, a division of employers' lobby Ibec, said it planned to raise the issue of onerous commercial leases "at every opportunity" with the Government. Although it welcomed the provision in the programme for government to introduce a code of conduct between landlords and tenants for commercial rents, it said "the issue needs much more direct and urgent intervention".

"Rent liabilities is fast becoming a key factor in whether many retailers will survive this crisis," said Arnold Dillon, director of Retail Ireland. "Many are simply unable to pay for the lockdown period, while the reduced trade due to social distancing and empty city and town centres means the pre-Covid cost base is not sustainable."

“An arbitration process is required to avoid hundreds of these disputes ending up in courts, ultimately leading to a further wave of business failures and job losses. The Government has taken action to protect tenants in the private housing market. Intervention is also required in the commercial market.”