In standard FSP reports, rent sustainability is assessed on two dimensions: Corporate Risk and Unit Risk. Corporate Risk Refers to the level of risk associated with the business overall. For example, HMV may have been performing well in High Wycombe, but financial vulnerability across the Company has put the individual store in jeopardy. Corporate Risk is assessed using information from Company Accounts that is in the public domain and is shown in this example report. Corporate risk can be assessed only for retailers that file annual accounts at Companies House.

1. FSP RETAIL BUSINESS CONSULTANTS
Section 6: Sustainable Rents

2. Passing Rent – Sustainability
FSP RETAIL BUSINESS CONSULTANTS40
In standard FSP reports, rent sustainability is assessed on two dimensions: Corporate Risk and
Unit Risk.
Corporate Risk
Refers to the level of risk associated with the business overall. For example, HMV may have
been performing well in High Wycombe, but financial vulnerability across the Company has put
the individual store in jeopardy. Corporate Risk is assessed using information from Company
Accounts that is in the public domain and is shown in this example report. Corporate risk can be
assessed only for retailers that file annual accounts at Companies House.
Unit Risk
This refers to the health of a particular retail unit. For example, Next is financially healthy as an
overall business. However, for various reasons, Next might not trade well in every location.
Assessing unit risk requires the use of sensitive, and usually confidential, information (e.g. annual
rent per unit). In this Demonstration report, the unit risk section is fictitious; it is not indicative of
trading in High Wycombe town centre, and is provided only as a visual aid. It will be made clear
which charts are examples, and which are based on actual data in the following pages.
This section is for example purposes only and does not reflect the true sustainability of
Eden’s retailers.

3. Passing Rent – Sustainability
FSP RETAIL BUSINESS CONSULTANTS41
The Demonstration chart shows the
proportion of rent in Eden deemed
Thriving, Viable and Vulnerable
As a whole, Eden is Viable, with
Sustainable Rent 8% below Passing Rent
39% of rent is Thriving, largely driven by
Marks and Spencer
42% of rent is deemed as Viable
19% of rent is deemed Vulnerable,
predominantly driven by Gap and Lush
Source: FSP
For an explanation of how FSP calculates Sustainable Rents, please refer to Appendix 5.
Vulnerable
19%
Viable
42%
Thriving
39%

4. Retailer Sustainability
The majority of merchandise categories are deemed Viable. C&F is particularly strong with
Sustainable Rent 15% above Passing
Leisure Goods and F&B categories are both Vulnerable
FSP RETAIL BUSINESS CONSULTANTS42
Source: FSP
Total Gross
Lettable
Selling
Space
Space
Conversion
Est Sales
Density
Est Gross
Turnover
Passing
Rent
Sustainable
Rent
Merchandise Category ft
2
ft
2 % £/ft
2
£k £k £k £k %
Clothing and footwear 311,155 191,178 63 397 76 752 862 110 15
Personal 57,433 42,336 36 593 25 830 686 - 144 - 17
Household 59,711 42,602 40 469 20 140 138 - 2 - 2
Leisure 31,558 20,266 56 518 11 489 340 - 150 - 31
F&B 42,359 25,250 68 313 7,906 256 183 - 73 - 29
Total Unit Shops 502,216 321,632 64 25 8,038 2,467 2,208 - 259 - 10
Grocery 4,446 3,432 77 510 1,749 262 292 30 12
Total Non-Grocery/Grocery 506,662 325,064 64 30 9,787 2,729 2,500 - 229 - 8
Example Summary Schedule
Sustainable over Passing

5. Financial Risk Matrix
The Financial Risk Matrix (overleaf) classifies retailers according to the Department for Business,
Innovation and Skills (BIS) Wealth Creation Index (see Appendix 6 for definitions) – Very Worrying,
Head Above Water or Healthy. FSP compares this to individual unit risk – Vulnerable, Viable or
Thriving within Eden. By definition, the analysis deals with historical accounts data and in a period
of high retail instability, like the present time, retailers’ viability can change substantially from one
accounting period to the next.
It should be stressed that FSP’s Sustainability model assumes retailers will be seeking to achieve
at least their average portfolio Return on Trading Assets (ROTA). Thus, retailers showing as
Vulnerable are not necessarily losing money, but may be achieving a below average return.
FSP RETAIL BUSINESS CONSULTANTS43

6. Financial Risk – Passing Rent Matrix Example
FSP RETAIL BUSINESS CONSULTANTS44
Source: FSP
The chart below is an example, showing what a standard FSP Risk Matrix would look like if the
relevant rental information were provided. Note – the Unit Risk shown below is also example only.
Vulnerable Viable Thriving
CorporateRisk
Unit Risk
Very
Worrying
Head Above
Water
Healthy
M&S
21%
15%
3%
19%
17%
6%
8%
6%
5%
Starbucks
PandoraGames Workshop
Monsoon
Office
Boots
Clarks
Ernest Jones
River IslandWaterstones
New Look
Holland & Barrett
Herbert Brown
Nando's
Subway
Cineworld
Apricot
Superdry
Charles Fish
H. Samuel
Ann Summers
Cargo
The Fragrance Shop Zara
Claire's
House of Fraser
F.Hinds
Jones Bootmaker
Blue Inc.
Linens Direct Clintons Beaverbrooks
H&M L'Occitane
YO! Sushi Thorntons
Mothercare
Gap
Lush
Bhs
HMV
Muse
Build A Bear Workshop
Two Seasons
Bijou Brigitte
Next
Zizzi

7. Corporate Risk Commentary
BIS Very Worrying – 5% of Passing Rent subject to analysis by BIS methodology.
Lush – Medium Risk – £12.6m is owed to group undertakings
Gap – Medium Risk – there has been substantial re-organisation of the European operations
and there has been an undertaking by Gap Inc. to support the Company for at least another 12
months. £20.1m is owed to subsidiary undertakings
Muse – Medium Risk – £1.8bn is owed to group undertakings under long term creditors
FSP RETAIL BUSINESS CONSULTANTS45

8. Unit Risk Commentary
A further 14% from rent is from retailers deemed as Vulnerable by unit risk, but Head Above Water
or Healthy by Corporate risk – indicating Vulnerability is specific to Eden.
An example of these retailers include:
Cargo – significantly undersized unit compared to the retailer’s FSP audited average, plus a
high rent per ft². A larger unit with lower rent per ft² could be more suitable for Cargo
Waterstone’s – poor sales, which is an on-going company wide problem, and above average
rent per ft² for this retailer
Games Workshop – low estimated sales density for the retailer. With an above average store
size for Games Workshop, a smaller unit could provide better sales densities
FSP RETAIL BUSINESS CONSULTANTS46

9. Sustainable Rents Centre Plan
FSP RETAIL BUSINESS CONSULTANTS47
Source: FSP/GOAD
An example of a Sustainable Rent plan of Eden is shown, classified by unit risk – Vulnerable,
Viable or Thriving.