Wednesday 24 June 2020 12:24 pm

Rent day: Landlords braced for as little as one-sixth of quarterly payments

Commercial property owners are braced to receive as little as 15 per cent of the rent they are owed today, with quarterly payments due by the end of today.

Experts have warned of an impending crisis on both the landlord and tenant side without further government support, with businesses across the spectrum unable to pay their rent after the coronavirus lockdown all but wiped out their revenues.

Read more: Boxpark chief: Rent crisis could be disastrous for London hospitality

The government last week extended anti-eviction measures until the end of September, but calls are increasing for it to underwrite rents for those unable to pay, rather than simply allowing payments to be deferred.

Vivienne King, chief executive at Revo, which represents landlords, tenants and local authorities, said: “Without doubt quarter rent day will intensify pressure on both retailers and property owners, and loss of income will travel quickly through the payment chain to all corners of the economy.

“This will be a difficult quarter for all our members with fears that between 15 per cent and 40 per cent of rent due today will be paid. 

“If that is the case, it will have severe implications for property owners, their lenders and ultimately pensioners and savers who rely directly or indirectly on retail property for income.”

“This level of financial distress demands direct intervention from government to underwrite rents in order for the retail sector and the millions of people involved in it to support the UK recovery and the government’s levelling up agenda.”

Meanwhile, Julie Palmer, a partner at insolvency expert Begbies Traynor, noted that with many major retail chains renegotiating terms on their leases in recent months, there could be “a crisis of confidence in the business of owning retail space”.

“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.”

It comes after retail landlord Intu told investors yesterday that it has lined up administrators in case ongoing talks regarding the shopping centre owner’s future fail.

It has appointed Big Four accountancy firm KPMG as administrator as part of a “contingency plan” as it continues to engage lenders about new funding.

The owner of the Trafford and Lakeside shopping centres first began talks with lenders in March, but had been struggling financially before the coronavirus pandemic forced the closure of most retail stores.

Read more: Retail landlord Intu seeks debt standstill as rent payments fall in lockdown

Intu said discussions have centred on a standstill on loan repayments, which some stakeholders want to limit to less than 18 months. It added that it does not expect the standstill to be agreed for more than 15 months.

England’s non-essential retailers were allowed to reopen their doors to customers last week, while pubs and restaurants will be allowed to start trading again on 4 July.

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