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Waterfront Karen mall owners sue Shoprite for Sh520m

The Muguku family is demanding $4.88 million (Sh520 million) for anticipated loss in rental income for the remainder of the tenancy period.

They 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.

The family of late billionaire Nelson Muguku has sued Africa’s biggest supermarket chain, Shoprite Holdings, for Sh520 million in lost rent just months after the retailer closed shop at The Waterfront Karen mall.

Shoprite announced the closure of its Karen branch in April citing reduced flow of shoppers, leading to loss of jobs for about 104 staff that worked at the outlet.

Consequently, it issued a three months’ notice to terminate its lease contract at the mall, owned by the Muguku family, ending the store’s less than a year operation at the high-end facility.

Now, 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.

The Muguku firms argue that they still have a 10-year contract with Shoprite, and that the lease agreements did not provide for termination.

EXPECTED RENT FOR 10 YEARS

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. ‘DECEIVED SHOPRITE’ 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 […]

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