A11 BUSINESS DAY
FT
Monday 22 October 2018
C002D5556
NATIONAL NEWS
Russia hits back at US over withdrawal from nuclear...
Landlords grapple with Sears bankruptcy
Continued from page A10
Decline to worsen for some malls but others poised to benefit from higher rents
of contention between the two countries. A senior administration official told a small group of reporters on Thursday that the Trump administration was also looking at renegotiating another nuclear treaty between the US and Russia, the 2010 New Start treaty, which caps the number of nuclear warheads each country can have and is due for renewal in 2021. “We don’t have a definitive US position yet, but there are several considerations including renegotiation,” said the official, who added another option would be to agree an extension, but that would be “unlikely”. Mr Trump on Saturday said the US would consider capping its nuclear weapons development if it could make a new arrangement with both Russia and China, which is not a signatory to the deal. “But if Russia is doing it and if China is doing it, and we’re adhering to the agreement, that’s unacceptable,” he said. Alexei Pushkov, a Russian senator, said Mr Trump’s statement was “returning the world to the cold war”. “Such an exit would be the second most powerful blow inflicted on the world’s entire system of strategic stability,” he said. “The first blow was America’s withdrawal from the anti-ballistic missile treaty in 2001. Once again the initiator of the treaty withdrawal is the US.” Heiko Maas, Germany’s foreign minister, said that while Europe had “frequently called on Russia in the past to address the serious charges that it is violating the INF treaty”, the US decision to withdraw was “regrettable”. “The INF treaty . . . has been an important pillar of our European security architecture for 30 years. For us in Europe it is therefore of tremendous importance. “An end to the treaty would also have negative consequences for the New Start treaty which we urgently need in order to codify the successes of nuclear disarmament including beyond 2021.” Gavin Williamson, UK defence secretary, blamed Russia for the breakdown, insisting that Britain stood “resolute” behind the US. “Our close and long-term ally of course is the US and we will be absolutely resolute with the US in hammering home a clear message that Russia needs to respect the treaty obligation that it signed,” said Mr Williamson, who added that the Kremlin was making a “mockery” of the agreement. “We, of course, want to see this treaty continue to stand but it does require two parties to be committed to it and at the moment you have one party that is ignoring it. It is Russia that is in breach and it is Russia that needs to get its house in order.”
ALISTAIR GRAY
L The death of Jamal Kashoggi has led to an international reappraisal of Saudi Arabia’s crown prince Mohammad bin Salman, who had previously been considered a reformer and moderniser. © PA
World leaders condemn Saudis over Khashoggi account Donald Trump says he is ‘not satisfied’ with claim that journalist died in fist fight in consulate KATRINA MANSON
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nternational condemnation of Saudi Arabia over the death of Jamal Khashoggi increased on Saturday after Riyadh’s claim that the veteran journalist died in a fistfight was greeted with near-universal scepticism. US president Donald Trump said he was “not satisfied” with Saudi Arabia’s latest explanation for the death of the columnist and dissident. “I’m not satisfied until we find the answer,” he told reporters on Saturday, adding he was considering imposing sanctions on Riyadh, a key foreign policy ally of his administration and a major buyer of US weaponry. Mr Trump said he did not know the whereabouts of Mr Khashoggi’s body, but that no one in his administration had heard or seen alleged recordings of the incident — or a transcript of them — which Turkish officials say they possess. Mr Trump said he expected to speak again to crown prince Mohammed bin Salman and have an answer by Tuesday, adding that it was “possible” Saudi Arabia’s de facto leader did not know about the events. He had initially described the Saudi statement as “a great first step”.
Riyadh said on Saturday that it had arrested 18 unidentified Saudis and sacked two senior offi cials close to Prince Mohammed — Ahmed Assiri, the deputy intelligence chief, and Saud al-Qahtani, a royal court adviser — as the kingdom sought to defuse an international crisis over the journalist’s death. Mr Trump said on Saturday the sackings were “a big first step”.He also said he would work with Congress, where many have called for sanctions, but that he wanted to preserve a ten-year arms deal which the administration said was worth $110 billion that he struck with Riyadh on his visit there last year. “But there are other things that can be done, including sanctions,” he said. The confirmation of Mr Khashoggi’s death followed more than two weeks of strong denials by Saudi Arabia that it had been involved in his disappearance after he entered the consulate on October 2. But the Saudi explanation contradicted Turkish officials who have said they believed a 15-man hit squad flew into Istanbul, killed Mr Khashoggi and dismembered him. Diplomats and analysts have said that any operation against Mr Khashoggi was unlikely to have been
authorised without the knowledge of Prince Mohammed. Saudi King Salman instructed his son Prince Mohammed to head a committee to restructure the intelligence services within 30 days, suggesting that the crown prince had been absolved of blame. Turkey warned on Saturday that it would not accept a cover-up. “Turkey will reveal what happened. No one should have any doubt about that. We are conducting an independent investigation,” Omer Celik, a spokesman for Turkey’s ruling Justice and Development Party told Anadolu, the state news agency, said on Saturday. “We are not prematurely accusing anyone, but it is not acceptable to us for anything to remain covered up.” Justice and Development deputy chairman Numan Kurtulmus said he believed “it’s not possible for the Saudi administration to wiggle itself out of this crime if it’s confirmed.” Turkish president Recep Tayyip Erdogan spoke with King Salman, who has become increasingly assertive in trying to manage the crisis, shortly before the kingdom gave its account of Mr Khashoggi’s death. There were no details of their conversation.
Thousands of migrants cross into Mexico on way to US Donald Trump has promised a hard line on the human caravan from Honduras that is heading north JUDE WEBBER
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housand of Honduran migrants trooped out of the southern Mexican town of Ciudad Hidalgo on Sunday en route to the US after surging across a river on the Guatemalan border where they had been stuck on a bridge for two days. The caravan of migrants fleeing poverty, violence and political repression has blown up into a serious humanitarian and political crisis for Mexico, which has sent hundreds of federal police and marines to the crossing between Ciudad Hidalgo and Tecún Umán in Guatemala. Ana Martínez, 33, left her four children aged from eight to two in San Pedro Sula in Honduras and does not want to go back after gangs killed her parents and brother-inlaw. “If I go back, my life is at risk,” she said. She said her shoes had broken but she had been given flip-flops: “I’m going to the US, even if I have to go barefoot.” On the main road out of town, immigration officials urged the migrants to apply for refugee status,
but few trusted them. “You can go to a shelter. The Mexican state will receive you,” said Francisco Echeverría, federal delegate for the National Migration Institute in the state of Chiapas. “But you can’t continue in an irregular situation transiting through the whole country.” Paola Ramírez, 21, travelling with her husband and four-yearold daughter, said she had no faith in them. “We don’t believe in this shelter,” she said. “We prefer to run the risk.” One migrant shouted: “Tell Donald Trump we’re on our way!” For years the biggest source of migrants to the US, Mexico is now under intense US pressure to be Washington’s border cop. Most migrants were aiming to reach the US despite President Trump’s threat to close the US border with Mexico and send the military to keep them out. From the southern Mexican border, they still have about another 3,000km to go. Mexican police fired tear gas into the crowd crammed on to the bridge Friday when a violent group burst through a border gate. But officials on Saturday began letting migrants
though, once federal police had erected tall crash barriers. As Mr Echeverría took a small group in his vehicle, saying he would prove the shelter offer was true, hundreds of riot police with shields were preparing for the caravan further up the road. A police helicopter buzzed ahead. It was not immediately clear whether the police would detain the migrants for crossing illegally and hand them over to the authorities to be deported. By some estimates, their number has swollen to more than 7,000. “We’re going to invite them to go to shelters but I don’t think they’ll want to go,” said one police officer who declined to be named. On Saturday, makeshift rafts were plying a busy trade across the river from Guatemala and some migrants swam or waded across with the help of ropes. “There are thousands of us, they can’t arrest us all,” said Hugo Lara, 28, from Cucuyagua in northern Honduras. “They’ve tried to stop this caravan; it wasn’t supposed to get into Mexico, but here we are.”
andlords to Sears, the bankrupt US retailer, are in line to more than triple rents if they can find occupants for the sites — but face a years-long search for tenants and refurbishment costs running into tens of millions of dollars. The department store chain’s Chapter 11 filing last week is set to have a far-reaching impact on US shopping centres, which are already grappling with a raft of closures by other formerly reliable stalwarts such as Macy’s and JCPenney. Property brokers said the restructuring of Sears, an anchor tenant occupying more than 500 sites across the country, was likely to further widen the gulf between different grades of mall. While the retailer’s departure threatens to accelerate a downward spiral in already struggling areas, landlords in prime locations would be glad to be rid of it. “A lot of landlords will be able to triple rents — or do substantially better than that,” said Mark Hunter, managing director at CBRE who oversees the commercial real estate company’s mall-leasing business. Sears negotiated many of its leases years, in some cases more than two decades, ago, when it was “the place people wanted to shop”, said Ana Lai, senior director at Standard & Poor’s. Back then, a Sears store would draw customers, making it a valuable source of footfall for the mall. As a result of its bargaining power, the company was able to lock landlords in to long leases with below-market rents, often at low- to mid-single digit dollars per square foot. Real estate companies exposed to Sears include Simon Property Group, Washington Prime and Kimco, yet in each case the chain’s rents account for less than 1 per cent of group revenue, according to S&P. Sears’ allure has long since faded, and its departure provides owners of otherwise thriving malls an opportunity to find better prospects. James Taylor, chief executive of Brixmor Property, a landlord to about 11 Sears stores, said: “We are confident that space recaptured through the bankruptcy process will enable Brixmor to create meaningful value as the company remerchandises these assets.” Sears, which also operates Kmart, is to close 142 stores by the end of the year as part of an agreement with creditors. Under bankruptcy protection, the group is also planning to exit leases on about 200 other stores that it had disbanded but was still paying rent on. Additional properties may be up for grabs. Eddie Lampert, chairman, has said he is fighting to avoid an outright liquidation but lawyers warn Sears may struggle to avoid such a fate, putting the rest of the portfolio at risk. Whereas Kmart stores are located mostly near main roads or stand alone, almost 90 per cent of the Sears outlets are in regional shopping malls, according to CBRE. Of these, less than 30 per cent are estimated to be in class A malls — the kind that may feature an Apple store or a Whole Foods, where a dowdy Sears would be regarded as a blot. Just over half are in mid-tier class B locations and about a fifth in out-of-favour class C.