With ‘fast-fashion’ chain Forever 21 having just three stores in South Africa, local landlords are not too concerned about possible ramifications from the retailer filing for chapter 11 bankruptcy in its home market in the United States.
Los Angeles-based Forever 21 filed for bankruptcy support on Sunday in the US and is reportedly set to close some 350 stores around the world, including around 180 in its home country. It has more than 800 stores globally, mainly in the US, Europe, Asia and Latin America.
On Tuesday, Liberty Two Degrees (L2D) was the first South African real estate investment trust (Reit) to pronounce on the matter, saying the Forever 21 store at its Nelson Mandela Square property, next to Sandton City, only represents 0.27% of its total portfolio and 0.40% of its total portfolio gross rental.
In a voluntary Sens announcement, L2D noted that the Nelson Mandela Square store “is currently open and trading as normal”.
The group said it is aware of the global news regarding Forever 21 filing for bankruptcy. “Forever 21 in Nelson Mandela Square is managed by a franchisee and we are currently engaging with this party to ascertain the impact of the global closure of stores,” it added.
Speaking to Moneyweb about the announcement, L2D CEO Amelia Beattie said the double-level Nelson Mandela Square store takes up just over 2 000m2 of space. “While we are monitoring the situation, if the store does close at some stage, we have no doubt the space will be filled, as it is in an area of high demand,” she added.
The store overlooks the square and is Forever 21’s flagship outlet in the country. Other South African Reits with exposure to Forever 21 include Attacq, at its main Mall of Africa property at Waterfall City and Hyprop at its flagship Canal Walk super-regional shopping centre in Cape Town.
Beattie would not reveal the franchise owner of Forever 21 stores in South Africa, however, Moneyweb understands the owner for the region is based out of Dubai.
In a brief response, Hyprop CEO Morné Wilken said he is not too concerned about Forever 21’s US woes. He said the Canal Walk store takes up just over 1 300m2.
Attacq had not responded to Moneyweb’s queries by the time of publication.