Following a government-granted moratorium on eviction for non-payment, some landlords have received less than a third of their expected rent.
The impact of coronavirus lockdowns is continuing to severely impact the retail sector, with curtailed cashflow hitting the pockets of major retail landlords as renters look for ways to preserve their income. As a result, tenants that are unable or unwilling to pay their full rental amount are now being threatened with legal action.
Intu, the shopping centre landlord, recently reported that it had received just 29% of expected rent, even after offering a deferral and cutting service charges. “That rent is payable, that’s legally enforceable,” said Matthew Roberts, Intu’s chief executive.
Chris Griggs, chief executive of British Land, said it was allowing its smaller tenants a rent-free period but that it had its own costs to pay. “Look at a very large shopping centre with very few shops open, you have to keep all of it running,” he said.
The hospitality sector has been particularly hard-hit; while other types of retailer can sell products and services online, restaurants have been limited to takeout-only options, where do-able, resulting in a disproportionately serious effect on income.
The Vietnamese noodle chain Pho, Escape Hunt and Caffè Concerto are among those that have been threatened with action, according to the Financial Times. “We are facing a serious problem here,” said Stefano Borjak, director of Caffè Concerto. “They are trying to wind up the company, which does £40m turnover per year. The cash flow we have at the moment we need to pay staff.”
According to letters seen by the Financial Times, both Pho and Escape Hunt have also been threatened with action if they do not pay full rent for the next quarter to Sykes Capital, the landowner of their Reading sites. “We appreciate these are difficult times, however, payment of rent should be one of the highest priority business expenses,” the letter said.