Commercial property owners have warned they could struggle in the face of the coronavirus pandemic, after missing out on millions of pounds worth of rent payments due today as some retailers, including Primark, have withheld payments.
Quarterly rent bills were due to be paid by thousands of businesses today, but the Government announced on Monday that landlords would be unable to claim forfeiture or repossess properties for the next three months if rent is not paid.
Some of the UK’s biggest landowners, including Grosvenor and Shaftesbury, laid out plans to support under-pressure retailers, pubs and restaurants in response, while others remain locked in negotiations.
Shopping centre owners and other property firms have warned ministers that they will face “extreme challenges” without support to replace lost rent.
Edward Cooke, chief executive of Revo, said talks were under way with the Government about what support can be made available to landlords, potentially in the form of loans or grants.
He said: “We want these companies, which support thousands of jobs and invest billions in UK towns and cities, to survive, and most will with the right interventions.”
Some retailers, including Primark, have refused to pay their quarterly rent today while they wait for Government support to kick in. Others, including New Look, Superdry, H&M, Monsoon Accessorize, Arcadia and Frasers Groups have requested rent holidays, deferrals and discounts.
Primark has no e-commerce facility so the closure of its stores means it has no way to trade during the lockdown. The value fashion retailer wrote to landlords hoping to get a rent holiday on its 110 leasehold sites, which were due to pay £33m in rent today, according to The Daily Telegraph.
A spokesperson told the newspaper: “These are exceptionally difficult times and, like many retail businesses, we are looking closely at options to mitigate the significant impact of lost sales due to the Covid-19 outbreak.
“We are asking our landlords to support us by agreeing terms that will help offset some of the impact.”
Primark stands to lose £650m in sales for every month its stores are closed and stands to lose its number one position in UK fashion retail to either Marks & Spencer or Next as a result of its inability to trade online at this time.
Analysts have said that some property owners could default on their own loans if they fail to secure expected rent payments.
Andy Pyle, UK head of real estate at KPMG, said: “If rental payments are to be missed, property companies will be under increased pressure to pay interest on their own loans and they may even default.
“This will impact those invested in commercial property, some of whom may depend upon the regular income it provides.
“Far from just private or family wealth, these investors include those in receipt of pensions and savings, shareholders in REITS (real estate investment trusts) or beneficiaries of company and state pension schemes.”