Jun

‘It’s like the wild west out there’ – huge commercial landlord switches to monthly rent payment

admin

High profile
commercial landlord Shaftesbury has switched permanently to monthly rent
collections in a series of measures aimed at supporting
tenants and improving its bottom line.

The landlord, which boasts a 15-acre portfolio of restaurants, leisure
and retail in London’s West End, has also suspended paying
dividends to shareholders after revenue from rent dropped 4.9%.

Shaftesbury says it’s had discussions with its 800 commercial tenants to agree tailored solutions on rents and service charges, with the aim of collecting 50% of rents due from April to September 2020 “over time”.

But it’s the permanent switch to collecting monthly rents in advance for all commercial tenants from October that’s the biggest change.

Wild West End

“It’s like the Wild West out there at the moment – there are no rules – every landlord is different,” Adam Diamant, MD at Land Commercial, tells LandlordZONE.

“This is a nice gesture
which will help out tenants rather than the landlord. Most tenants would take
monthly payments over quarterly as it helps cashflow but makes life harder for
a landlord as they have to work out who’s paid every month, while being paid
quarterly makes debt collection and bailiffing easier.”

Shaftesbury
adds that it expects changes in the structure of leases to manage the fall-out
from the crisis, including different lease lengths, incentive packages and
turnover-related rents.

Publishing its half-year report, it explains:
“The collapse in West End footfall, evident from early February in Chinatown,
and then widely across the West End from mid-March, had an immediate impact on
the trading and cash flow of our 607 shops, restaurants, cafés, pubs and bars,
materially reducing the collection of rents in advance due on the March quarter
day.

“Many of our smaller office occupiers were
similarly affected, and we saw an increase in vacancy in our rental apartments,
as overseas tenants returned to their countries of origin.”

Commercial rent collection in the UK fell by 28.7% in March compared to the previous two years, according to Re-Leased, which reports that only 49.7% of rent due had been collected 10 days after the March quarter date, compared to 69.7% during the last two years on a like-for-like basis.

View Full Article: ‘It’s like the wild west out there’ – huge commercial landlord switches to monthly rent payment