Sports Direct sued for dilapidations on Wigan Warehouse

By Liza Helps Property Editor Logistics Matters

SPORTS DIRECT is being brought to court via a specific area of law known as dilapidations relating to breaches of a tenant’s lease obligations or covenants. A dilapidations claim can be made by the landlord against the tenant during or towards the end of a lease, or after the lease has ended. The landlord’s claim document – usually called a Schedule of Dilapidations – will contain references to breaches of the tenant’s lease obligations, mainly relating to physical alterations and their reinstatement, redecoration, and repair.

In this case, first reported by The Financial Times – which as seen the court documents, JP Morgan said the retailers exit in June 2019 triggered by a tenant’s five year break in a 10 year lease, resulted in damages which cost the bank some £3.3 million to repair. In addition, the bank is suing for loss of rent income totalling £1.8 million which it had to forgo as a result of the time it took to refurbish the property and re-let it. 

The property on Martland Park, Wigan, comprising a 346,526 ft2 distribution centre and separate office of 42,874 ft2, was sold by way of a sale and leaseback in 2014 by Sports Direct to Fidelity UK Real Estate Fund managed by JP Morgan, along with a further 100,000 ft2 warehouse for £21.15 million. (The property is now valued around £40 – 50 million.)

Sports Direct negotiated a 10-year lease with a tenant break in the 5^th year, at a rent of £1,600,474 per year on the property. Developed in 1998 and extended in 2002, the facility has 360 degree circulation, two separate yards and secure car parking. It has 12m eaves as well as 12 dock and seven level access doors in addition to 1000kVA of power. 

Frasers Group has yet to comment.