24/06/2020 - 13:14

Property owners respond to rent relief

24/06/2020 - 13:14

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More than 6,400 rental assistance agreements for retailers have been processed nationally in recent weeks, with Western Australia accounting for just 6 per cent of that rent relief.

Property owners respond to rent relief
Retailers operating in the food, services (hair, beauty, nails), clothing and footwear sectors accounted for the largest proportion of rental assistance agreements in the national survey.

More than 6,400 rental assistance agreements for retailers have been processed nationally in recent weeks, with Western Australia accounting for just 6 per cent of that rent relief.

Data released today by the Shopping Centre Council of Australia (SCCA) shows shopping centre owners and small to medium enterprise (SME) retailers continue to make headway in negotiations and discussions for rental assistance in light of COVID-19.

SCCA surveyed its members on any offers, in-principle agreements or agreements reached in relation to short-term rental assistance over a nine-week period, from March 30 to May 31 2020.

The survey found that every SCCA member had offered or reached agreement with SME retailers or rental assistance on a case-by-case basis.

Under the Commercial Tenancy Code of Conduct announced by the Prime Minister on April 7 2020 this covers both waiving and deferring rent, as well as arrangements such as extended lease terms. This Code guided state governments to draft their own legislation, the WA Code released May 29.

SCCA members have offered or reached agreement on rental assistance for 6,473 SME retail stores, with SME retailers in shopping centres representing 63 per cent of total stores.

WA accounted for just 6 per cent of those agreements, with New South Wales and Victoria collectively representing 61 per cent.

This included more than 1,400 agreements finalised in the two-weeks to 31 May - an increase of almost 20 per cent since the SCCA last surveyed its members, with more than 150 agreements being reached per day.

SCCA executive director Angus Nardi said the increasing number of agreements illustrated that the Commercial Tenancy Code was working and that owners and tenants were reaching practical solutions.

“Pleasingly, nearly half (45 per cent) of the SMEs retailers that have requested rental relief have reached an agreement. But there is more work to do. The SCCA urges SME retailers to review the Code of Conduct, and come to the table with requests that are fair and proportionate to their circumstances,” Mr Nardi said.

“While the vast majority of conversations have been productive, there are instances where agreements are taking longer to negotiate. This is often as a result of a lack of documentation to support claims for rental assistance.

“Nonetheless, shopping centre owners are committed to reviewing and appropriately responding to every rental assistance request to ensure SME retailers can thrive as more Australians return to the shops.”

The sectors that accounted for the largest proportion of offers or agreements were food, services (hair, beauty, nails), clothing and footwear.

Mr Nardi said the progress in agreements comes as increases in consumer confidence, foot traffic and store reopenings point to improved trading conditions, reaffirmed by the preliminary ABS Retail Data for May which had an uplift of 16.3 per cent - reportedly the single largest monthly rise in seasonally adjusted retail trade on record.

SCA Property Group, a real estate investment trust company, told shareholders in its recent ASX announcement that its anchor tenants across its national shopping centre portfolio had performed well, with supermarket moving annual turnover (MAT) as at May 31 2020 up 4.4 per cent (compared to 2.6 per cent as at December 31 2019).

The performance of its mini-major and specialty tenants had however been mixed, with specialty MAT at negative 1.1 per cent, compared to 2.3 per cent as at December 31 2019.

In WA, SCA’s retail assets include Busselton Shopping Centre, Kwinana Marketplace and Currambine Central.

Lester responds to rent relief  

Lester Group, which recently purchased the Midland Megaplex retail complex for $58 million, said 40 per cent of tenants across its property portfolio (mostly comprising commercial and industrial) had requested rent relief in some form.

In a June 18 investor update, Lester said it had responded to all requests by enabling tenants to defer their rent payments for the months of April, May and June 2020.

“This early deferral of rent has enabled our tenants to stay safe, manage their businesses and cash flows, allow for the release of the state code of conduct for landlords and tenants, enable our tenants to gather the financial information and evidence required under the Code and for negotiations to progress,” Lester said in the update.
 
“This process is still incomplete and has taken a significant amount of additional and unexpected time, work and effort from our tenants, agents and staff. We are most appreciative of their dedication, particularly during this time of such safety concerns. It has been a team effort.
 
“Despite our view that the Code is very tenant centric, our approach is to follow it to the letter, have it guide our requests for information, tenant eligibility for relief and negotiations. It has put us in good stead.”
  

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