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05-04-2020, 11:14 AM
#4181
I think Balance is on the right track here. Practicalities will trump legalities in many cases, I reckon.
(Apologies for using the T word!)
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05-04-2020, 11:20 AM
#4182
Originally Posted by percy
Depends on their lease.
During this current lockdown period some leases will require the tenant to keep paying the rent even though the premises are closed. Other leases may allow for rent to be suspended for businesses that provide non–essential services. However, there are a variety of different lease clauses in the market so it is obviously important to check the exact wording of the lease.
Going from Kiwi Income Properties letter I previosly posted, very few of their leases will have an out clause.
I expect other Mall owners to have similar leases.
... and they would say that, wouldn't they?
But I think it doesn't really matter whether they can enforce ongoing rent payments or not. The option for landlords is to either bankrupt most of their tenants (which would be bad for landlords, because it means they lose their respective income streams forever unless you see plenty of companies queuing up for expensive mall space) or to temporarily forfeit some of their rents but keep the income stream long term.
The real question is - do we expect in a year from now most malls be empty, closed and in disrepair? If yes, than this is due to landlords demanding their rent now.
Being an optimist I hope for a pragmatic solution with business, landlords, government, insurance companies (business continuity insurance) and banks each coming to the table, which would be good for HLG as well.
Obviously - they all will carry some part of the burden, which means nothing good for tax payers and (in the short term) for shareholders of any of these.
----
"Prediction is very difficult, especially about the future" (Niels Bohr)
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05-04-2020, 11:35 AM
#4183
Assuming their is no out-clause from a pragmatic point of view I think good tenants will find landlords are prepared to "do a deal". This might be part rent forgiveness and part rent deferral. At the end of the day this lockdown is hopefully only going to be a short term issue and if a landlord makes a tenant bankrupt there's every chance they're going to experience a longer period without rental income than if they work with their existing tenant.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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05-04-2020, 11:35 AM
#4184
Changes happening in ChCh.
Spotlight has left The Colombo.
KMart has left The Palms and there is talk Countdown will also leave.
New World has left City South.
Pak'n Save will move from Northlands to Foodstuffs Main North Road site.
Smiths City left Bush Inn.
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05-04-2020, 11:37 AM
#4185
Originally Posted by Beagle
Assuming their is no out-clause from a pragmatic point of view I think good tenants will find landlords are prepared to "do a deal". This might be part rent forgiveness and part rent deferral. At the end of the day this lockdown is hopefully only going to be a short term issue and if a landlord makes a tenant bankrupt there's every chance they're going to experience a longer period without rental income than if they work with their existing tenant.
We all hope you are right,however, those who had dealt with Mall landlords will have their doubts.
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05-04-2020, 11:46 AM
#4186
Originally Posted by percy
We all hope you are right,however, those who had dealt with Mall landlords will have their doubts.
Yeah I hear what you're saying, they are as tough as old boots. That said HLG have demonstrated a history of being quite nimble with the closure of unprofitable stores previously so one can only be left to speculate on the exact terms of their leases. I think they're big enough to take an assertive approach with landlords.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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05-04-2020, 11:48 AM
#4187
@BlackPeter Question I ask is when is enough rent relief enough after 1 or 2 months half rent for a year? or should businesses solve their own problems first by removing excesses like huge cuts to directors fees and managements wages. Will the banks write off loans or just defer payments.
If I was THE landlord be rather upset after giving rent relief and watching directors fees and managements wages increase after Covid-19 for doing such a wonderful job getting through crisis.
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05-04-2020, 11:49 AM
#4188
Originally Posted by percy
We all hope you are right,however, those who had dealt with Mall landlords will have their doubts.
They are hard bastards to deal with - mainly because of the demise of strip shopping in favour of mall shopping. The malls could cling on a queue of prospective tenants wanting to lease space in the malls.
But that’s prior to the recession we are now experiencing and which is going to get worse before getting better.
Doubt there’s going to be the same queue of prospective tenants wanting in. More like many tenants looking to exit.
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05-04-2020, 11:53 AM
#4189
I do not know which would be worse,being a retailer or a Mall owner.
ps.
I remember office staff of one Mall owner, used to buy their lunch from the bakery over the road, as they were cheaper than the cafes in their Mall.[who were paying their high rentals]
Last edited by percy; 05-04-2020 at 12:02 PM.
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05-04-2020, 12:04 PM
#4190
Originally Posted by percy
I do not know which would be worse,being a retailer or a Mall owner.
Exactly the point. As long as each side can see the problems the other faces, then the solution of working together through this becomes obvious. Neither side will win with COVID-19. But going back into your respective silo will ensure that both sides will lose much more.
And the banks in the background will need to co-operate too!
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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