19 landlords sue Nakumatt for Sh600m rent arrears

A Nakumatt branch at the Westside Mall in Nakuru. PHOTO | Suleiman Mbatiah | NMG
A Nakumatt branch at the Westside Mall in Nakuru. PHOTO | Suleiman Mbatiah | NMG 

Troubled retail chain Nakumatt’s revelation that it will shut down more branches if a proposed takeover deal with rival Tuskys goes through has sparked a new war with landlords, who have filed fresh suits to evict the retailer from their premises in Nairobi, Nakuru, Kericho and Kakamega.

Kakamega-based Holden Investments (Holdent Mall), Green Square Limited (Green Square Mall) of Kericho, CK Patel Limited (Westside Mall, Nakuru), Parkside Developments Limited, High Park Investments and Highport Properties (Nairobi) have sued Nakumatt, seeking to terminate the retailer’s leases and take back the lettable space.

The eviction push came as it emerged that Nakumatt owes the 19 landlords Sh596 million in rent arrears.

They have since joined the petition seeking to declare the retail chain insolvent.

Nakumatt, which has more than 60 branches across Kenya, Uganda, Tanzania and Rwanda, has rent arrears estimated at more than Sh1 billion.

High Park Investments (Highpark Towers, Highridge) and Highport Properties, which leased out godowns to Nakumatt, said the retailer had yet to confirm which branches will be affected by the planned shutdown.

'Not interested'

The two real estate firms insist that they are no longer interested in doing business with Nakumatt, even if the retailer succeeds in turning around its fortunes with the proposed Tuskys takeover deal.

High Park is demanding Sh12 million from Nakumatt while Highport is owed Sh8 million in rent arrears.

The eviction suits were filed less than a week after Nakumatt met its creditors and made public plans to shut down non-performing branches as a cost-cutting measure.

Parkside Development, which owns Nairobi’s Galleria Mall, says Nakumatt has failed to restock its shelves, driving away customers.

The mall owners say that Nakumatt’s fall has driven away thousands of customers, adversely affecting other tenants who depend on the retailer’s traffic to drive sales.

“It has since been disclosed that Nakumatt intends to relinquish certain premises as part of its recovery plan but to date it has failed to give full details of the affected premises. High Park Investments and Highport Properties continue to incur losses on account of lost rent for the subject premises,” the mall owners say.

High Park and Highport say in the suit papers that they have resolved not to sustain the said leases regardless of any proposed recovery plans by Nakumatt.

Nakumatt owes Galleria Sh87.9 million, Nakuru’s Westside Mall (Sh59.2 million), Kakamega’s Holden Mall (Sh34.5 million) and Kericho’s Green Square Mall (Sh22 million).

The rent arrears presented in court, however, exclude those of other landlords such as the Junction Mall and Thika Road Mall who had previously attempted to attach Nakumatt’s goods.

Nakumatt has since exited Thika Road Mall and has been evicted from the Junction Mall. Holden Limited says Nakumatt’s failure to pay rent has affected its repayment of a loan it took from the Bank of Baroda, and now wants to repossess the space as the lender may sell its mall to recover due sums.

Right to possess premises

Galleria and Westside Mall owners say they have written to Nakumatt informing it of their right to take possession of the let premises in the event of failure to remit rent, but that the retailer is yet to hand back the rented areas to them.

“Parkside has issued a formal 30-day notice of forfeiture of the lease, which has lapsed and Nakumatt consequently has no legitimate right or interest in the suit premises and ought to vacate the same forthwith.”

“Despite the 30-day notice period having lapsed and Nakumatt admitting inability to pay the rent arrears, Nakumatt has not taken any steps to hand over vacant possession,” Galleria’s director, Trevor Kanja, says in suit papers.

Nakumatt is also battling demands for payment of rent arrears from South Coast Holdings (Diani), Primrose Management Limited (Prestige Plaza), Integer Limited (Mega), Grandways Ventures Limited, Kenindia Insurance, Sabaki River Holdings (Malindi), Rigdeways Mall, Shiloah Investments (Kisumu) and Grandways Venture Limited (Kitale).

The retailer had in its meeting with creditors asserted that once cash starts flowing inwards, it will prioritise dues to employees and landlords before moving onto suppliers, financiers and other debts.