Rent row brewing at Bewley's
A major row is brewing between coffee group Campbell Bewley and its landlord, Ickendel Ltd, which is controlled by Johnny Ronan and which has had its loans transferred to the National Asset Management Agency.
At issue is the €1.5 million rent on Bewley’s cafe in Grafton Street set back in the roaring Noughties – 2007 to be exact.
That was roughly twice the level set in 2002 as part of the normal five-year rent review and reflected the frothy Celtic Tiger valuations of the day.
Bewley contends the lease allows rents to fall to market values. But the landlord (Ickendel/Nama) argues that rents cannot fall under the terms of the agreement.
Late last week Ickendel initiated legal proceedings against Bewley to clarify the interpretation of the rent review provisions of the lease. The case is up for mention in the High Court next Wednesday.
Bewley’s position is that the market rent needs to be established first and a related arbitration process is currently under way to do just that.
This process is the subject of legal proceedings brought by Bewley’s. That action is due in the High Court on March 21st next.
Bewley’s rent review has actually been pending since January 1st.
Bewley’s chief executive, John Cahill, told me this week that the cafe is losing about €700,000 a year on turnover of
€6 million, and insists that costs have been cut to the bone already in an attempt to make the business viable.
It is being supported by other parts of the Bewley group, which made a profit of €495,000 last year.
The cafe is a protected structure and there are limitations on its uses, which complicates the matter.
Cahill argues that a 50 to 55 per cent reduction in rent would be appropriate given that the rent on the former La Senza outlet on Grafton Street had to be dropped by 53 per cent to secure a new tenant.
Ickendel holds a different view, presumably with the backing of Nama.
It should prove to be an interesting test case in the whole area of rent reviews.