British retail property owners and tenants are working together to defer rent payments and find other solutions that allow shops, businesses and landlords to ride out the coronavirus shutdown.
Home furnishing retailer Dunelm was the latest major UK retailer to say it was launching talks with its landlords on rent reductions.
The chain, which also said it was drawing down all of its available credit to ride out the pain of the UK-wide shutdown, joins a growing list of companies who say they are seeking lower rent or who simply will not pay when it comes due.
British property developer Land Securities said it was working with its customers to prevent any of them failing as a result of their rent bills.
“Forfeiture of the lease in these circumstances was not an option we were considering for customers unable to pay the rent and this approach has now been formalised by the government”, Landsec said.
Restaurant and pub industry body, UK Hospitality, has warned that the vast majority of businesses will be due to make advance quarterly payments of rents totalling billions of pounds on Wednesday.
The British government, scrambling to deal with the economic fallout from the coronavirus outbreak, said last week that landlords should not evict commercial tenants who do not pay their rent due to the crisis.
Burger King boss Alasdair Murdoch, who closed 500 stores on Tuesday, told the BBC’s Today programme he would not be paying rent this week as he prepares to cover staff wages until government support begins to flow to the company in late April.
“We’re not intending to pay our rent tomorrow,” he said.
“Most landlords as well have been reasonable about this. There are a number of creative solutions as well, we could add three months onto the end of the lease for those people who are unable to pay … at the end of these three months.”
A halt in payments, however, also raises the question of whether landlords will be forced to default on their own debt commitments.
Even before the government began to shut down British public life this month, Trafford Centre owner Intu Properties was flagging doubts over its ability to continue operations in the face of a collapse of several retail tenants.
However, Intu said it will lower its service charges for tenants by 22% in the second half of the 2020 financial year, delivering an 11% reduction for the full year.
Dunelm, for its part, said it was drawing down £175 million in available credit, cancelling its interim dividend and reducing executive pay for the next three months, while expressing confidence it could ride out the crisis without breaching its own debt commitments.