Late billionaire Nelson Muguku’s family is seeking Sh520 million in lost rent from Africa’s biggest supermarket chain, Shoprite Holdings, after the retail chain cut short its operations at Karen’s Waterfront Mall.
Two companies under the Muguku empire – Crossroads Limited and Karen Waterfront Phase Two Limited – have gone to court to demand the payment, in US dollars, from Shoprite after the tenancy deal went sour.
Shoprite in April issued a three months’ notice to terminate its lease contract at the Waterfront Mall after it announced the closure of the Karen branch due to reduced flow of shoppers, ending the store’s less than a year operation at the high-end mall.
However, the Muguku firms argue that they still have a 10-year contract with Shoprite, and that the lease agreements did not provide for termination.
Daniel Muthanji Muguku, a director of the two firms, told the court that the mall had expectation of receiving rent for a decade.
He argued that Shoprite was the anchor tenant at the Waterfront and was key to pulling shoppers to the mall. He also argues that the retailer’s exit had triggered panic and fear of loss of business among other tenants.
The Muguku family is demanding $4.88 million (Sh520 million) for anticipated loss in rental income for the remainder of the tenancy period.
The court case is expected to shed light on the struggles retail chains are facing amid increased competition. It will also offer insights on the performance of swanky malls seeking to attract international retailers and well-known brands that need a concentration of well-heeled shoppers to justify their investments.
Shoprite’s General Manager, Andrew Mweemba, has hit back at the Mugukus, informing the court that Waterfront had deceived the South African retail chain that the mall would have a mix of tenants – including banks, telcos, branded clothes outlets and ATMs – all of which would guarantee traffic to the supermarket. Shoprite also denied that it was the anchor tenant, arguing that its rival, Game Stores, had more strategic space at the mall, and, therefore, should be regarded as the premier resident.
The two Muguku firms have suffered a blow ahead of the suit going to full hearing after the High Court dismissed the petition to have the retail chain deposit Sh520 million as security for its appearance in court.
The two firms based their application on the fact that the six directors of Shoprite are foreigners with no known assets in Kenya.However, […]