Critical rent day arrives for struggling landlords and retailers

Landlords have braced themselves for a critical day as they attempt to secure rents from struggling tenants including retailers, restaurants and leisure firms.

Sector analysts have said they expect it to be a “grim day” for landlords, with a number of major chains halting rent payments due to the coronavirus lockdown.

Boots and Primark are among chains which stopped paying rents on some stores during the lockdown.

Many landlords secured significantly less rental revenue than expected in March due to the lockdown, but experts predict payments will be even lower on Wednesday following the impact of the three-month shutdown.

Ramzi Kattan, vice-president at Moody’s, said retail landlords will be “particularly hard hit” by reduced payments, with non-essential retailers only re-opening in England last week.

He added: “We expect a grim day for most UK commercial real estate landlords when the quarter rent is due, with most likely to collect less than half of due amounts.

“Weaker cash flow, struggling tenants and reduced demand for commercial space will weaken credit metrics and contribute to a more challenging operating environment.”

The British Property Federation said retailers alone owe rent worth £2.5 billion to landlords.

Intu – the shopping centre owner which is currently in talks with lenders to secure its future – received less than a third of rent due on 25 March and said it expects to face a hit of around £180 million for the year.

Julie Palmer, partner at Begbies Traynor, said: “Unfortunately retail rent day is likely to expose yet more holes in the retail sector as this crisis impacts the landlords that have enjoyed increasing rent for years.

“Whilst retailers will have to adapt to survive, the knock-on effect will be that landlords have to do the same.

“Traditional high street retail has created a house of cards for itself rather than an evolving ecosystem that is at risk of collapsing.”