SA’s mall owners slash rent - but there is still no deal with big retailers

Business Insider SA
Fourways, Mall
Fourways Mall. Photo: Andrew Thompson
  • SA's biggest commercial landlords have offered tenants new rental discounts during lockdown.
  • Smaller companies can get up to 100% off their rent in April.
  • But the property owners and large retailers - who have not paid rent this month - have still not struck a deal.
  • For more stories, go to Business Insider's home page.

SA’s group of large landlords – including the biggest malls in the country - has sweetened its rent offer to tenants who couldn’t open during lockdown.

But no agreement has been reached with some of its biggest tenants -  including The Foschini Group (TFG), Truworths, Mr Price Group, Woolworths and Pepkor. 

Since the start of the national lockdown, TFG, Truworths and Pepkor have stopped paying rent, after taking legal advice. Even Dis-Chem, which is trading through the lockdown, is only paying a part of its rent.

READ |  Large SA companies are not paying full rent. What will happen to small businesses who refuse?

Mall owners have now called on government to intervene.

On Tuesday morning, the Property Industry Group – which represents SA’s largest property owners – announced new guidelines for rental relief, expanding on an offer made earlier in April.

These are the new guidelines:

  • Companies with an annual turnover of up to R80 million who were worst affected by the lockdown (those who offer services, including restaurants, hairdressers, nail salons, theatres and travel agents) have been offered up to 100% off their rent off in April, as well as discounts of 55% for May and up to 45% in June.
  • Other smaller companies (which may be less affected as they sell non-essential goods that did not expire during lockdown) are offered up to 75% in rental discount in April, up to 50% in May and up to 40% in June.
  • Medium-sized retailers (annual turnover of below R1 billion) which sell non-essential goods get a 70% rental discount in April, 40% in May and 40% June.
  • Large retailers (annual turnover of more than R1 billion), which sell non-essential goods, have two options – 70% off in April, or 60% off in April and 50% in May.

All of these tenants are also offered an interest-free repayment period of up to 12 months.

READ | Courts will demand that landlords, tenants showed ubuntu during lockdown, lawyer says

For companies who could sell essential goods (equivalent to more than 75% of the store area), no relief is offered. For those who could sell essential goods in less than 75% of their stores, some discount – and extended repayment terms - is offered.

But despite lengthy negotiations with the large clothing retailers, no agreement has been reached on rental discounts. Earlier, large clothing retailers offered to pay 20% of their rent.

According to Estienne de Klerk, spokesperson for the Property Industry Group and CEO of Growthpoint, these retailers are refusing “to pay their share” of rates and taxes, which he says remains the major point of disagreement.

“SA’s property sector has voluntarily committed to the relief guidelines even though it hasn’t received any sources of relief, and we’re shouldering our share of the pain. We are paying our full obligations while giving retail tenants substantial discounts and we have gone as far as we can in assisting retail tenants with our updated proposal,” De Klerk warned.

“Our entire value chain is only as strong as the weakest link. If all the pressure continues to be placed on a single link, it will break and result in systemic collapse that will be felt in every household in SA.”

In a letter to landlords, seen by Business Insider South Africa, the Lewis Group, which operates Lewis, Bears and Best Home and Electric, said it will not pay its rental agreements during the lockdown period. 

Edcon - the embattled owner of Jet and Edgars - is not expected to pay rent either.

Compiled by Helena Wasserman and James de Villiers

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