‘We will remember how tenants behaved’

Non-paying retailers still trading, housing scare stories and MIPIM losses. One landlord shares his view of the world two weeks into lockdown.

Coming back in the New Year we were brow beaten – Brexit, election and Christmas. I had said during this, it is like the dotcom crash, when the economy didn’t collapse but steadied, and then grew through to 2007. The current economy had surged, but then Brexit et al steadied it and, just like in the aftermath of the dotcom bubble bursting, we were waiting for a new surge as business had renewed certainty of the majority government.

So, we were feeling relatively positive in the New Year and it was head down until MIPIM. It started well but a lot of news – floods, storms, a virus in China still kept slowing things down. MIPIM being cancelled was the first time I took notice; we had a lot of money out on the event and all of a sudden it was uncertain whether we would see a refund. And then the avalanche came.

So what observations in these early days? Two of note.

The first is the non-payment of rent. I understand the argument for businesses to not pay rent where they have had to close. Our office is closed, but we continue to pay our rent. The difference here is we are able to work from home and productivity is not zero. Where shops or leisure has closed, staff are off and there is zero income, I can understand why they cannot pay rent going forward. There is a grey area in the argument that they have had a good Christmas and traded the first quarter, but I get it.

What I don’t get is tenants who are trading, and trading well, and not paying any rent or service charge.

Tesco and Sainsburys are paying rent and are the respectable face of this – when the crisis subsides, I think we will remember how these tenants behaved – both in a property sense and in serving communities. Bravo!

Certain tenants, Poundstretcher being one, have issued letters to landlords saying they will not be paying and yet have been open every day since the crisis began, and are “trading very well” in the one store which we have spoken to.

Whilst Poundstretcher want to work “proactively and in partnership”, the announcement that no rent or service charge will be paid in a generic letter is not a good way to engender this. It feels like some tenants, the less professional or respectable ones, are taking the crisis to be an opportunity to ride through the goodwill offered by the business community to fill their pockets as quickly as possible. This will not be forgotten.

Secondly, the press are grabbing column inches by announcing that house sales have stopped, and that the government has announced this. It is rubbish and is grinding the housing market to a standstill. Homes can still trade and sales are going through. I completed the sale of personal apartment this week, but the fake news being touted to gain column inches will be seen, when this is over, to have done as much harm for the house building industry as the virus itself.

These are two of many observations I have and if invited back again, I will update as things develop.

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