Commercial Property

Eason facing legal action from owner of landmark Galway branch

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Landmark: Eason’s Galway store is at the heart of the city’s busiest shopping area. IMAGE: GOOGLE STREETVIEW
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Landmark: Eason’s Galway store is at the heart of the city’s busiest shopping area. IMAGE: GOOGLE STREETVIEW

Bookseller Eason is facing a legal action from the landlord of its landmark Shop Street branch in Galway, little more than a year after agreeing to sell the property for €7.5m in a so called sale-and-lease-back.

The case is understood to be an escalation of a rent dispute linked to the devastating effect on retailers including Eason of being forced to shut for three months at the height of the Covid-19 pandemic.

That loss of income is hammering even long-established players like Eason, one of Ireland's biggest indigenous retailers. Eason has a 200-year history and employs more than 1,000 staff across divisions that include retail, wholesaling and distribution of books, newspapers and stationery. It has increasingly also pushed into online sales.

In July, Eason announced that it will not reopen its seven shops in Northern Ireland, which had been closed during the lockdown, but shops in the Republic have been reopening on a phased basis since June. The Shop Street branch reopened in mid June and is trading.

Sources confirmed the dispute with a French investor who bought Eason's biggest Galway outlet relates to rents. The Galway lease is understood to be secured by a parent guarantee, meaning the landlord has a claim against the Eason group if the Shop Street branch were to fall into arrears.

Public details of the legal action against Eason do not say why it is being taken, other than to note the action is for summary judgement - meaning it has been taken over money owed.

A spokesperson for Eason said the company would not comment on the legal action.

"As a matter of policy we do not comment on our commercial arrangements with any third party. However, every action Eason has taken since the start of the current pandemic - which led to the temporary closure of all our stores - has been designed to ensure the survival of the business and protect as many jobs as possible."

Eason agreed to sell the huge, historic Shop Street property last year and leased it back under a 25-year agreement at a rent of €525,000 a year, according to a sales brochure prepared ahead of the deal by agents Bannon.

The sales literature said the lease is backed by a guarantee from Eason Operations Ltd for 10 years, although any payment in relation to this will be limited to two years' rent.

The shop is understood to have fetched €7.5m, slightly less than the €8m it was on the market for, but giving investors a fairly rich annual yield of around 7pc.

The filing to the High Court shows Winace Ltd, a company registered in Dublin last year, has initiated action against two entities: Eason Ltd and Eason Operations Ltd.

Winace is understood to be the Irish vehicle of the French investors who bought the property. Its directors are listed as Mansour Khalife and Miranda Khabiri, both with addresses in France. Winance also has a mortgage with Bank of Ireland secured on 33 Shop Street, according to documents it has filed with the Companies Office.

The shop at the centre of the dispute is a landmark property in the heart of what is usually Galway City's busiest shopping district and extends to 1,042.9 sq m over three floors, making it one of the city's biggest and, in most years, busiest shops.

The sale of 33 Shop Street was just one of a string of similar property disposals by Eason that raised around €100m for the bookseller but mean it is now a tenant paying rent in shops it had previously owned, in many cases for generations.

Those sales included the O'Connell Street branch in Dublin and big city centre shops in Cork and Limerick. Sale and lease-backs are used by companies to release capital tied up in property assets.

Accounts for 2019 show Eason made a profit of almost €4m on disposals that year.

Like other bookshops across the country it was closed for much of the first half of the year, as a result of the Covid pandemic.

Even as restrictions have eased, traditional bricks-and-mortar retailers of all kinds, bar a few exceptions like grocery and DIY outlets, are continuing to suffer from dramatically reduced footfall as shoppers stay away, or fear to linger, in shopping districts.

Irish Independent

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