It is reported that the South African Real Estate Investment Trust (SA REIT) Association, the South African Property Owners’ Association (SAPOA) and the SA Council of Shopping Centres (SACSC) have encouraged consultations between businesses and landlords in an attempt to mitigate the devastating effects of the lockdown on tenants and malls. This comes on the back of statements by many of the country’s largest chains who have said they won’t be paying rentals due to the lockdown.
It is reported that a relief package was unveiled by a newly-formed alliance of retail property landlords, the Property Industry Group. It is reportedly offering relief in the form of rental discounts of between 15% and 100%, as well as interest-free rental deferrals for April and May to help mitigate the impact on retail businesses that are not allowed to operate during the lockdown.
It is further reported that to qualify for the relief benefits, retail tenants will need to have an income of less than R80m and undertake not to retrench staff during the relief period. It is difficult to understand how this can be a requirement for relief. (It is NEASA’s view that it is naïve to believe that retailers will not be forced to retrench employees as a result of the lockdown and this requirement will probably exclude a lot of smaller retailers from the relief arrangement.) Furthermore, an undertaking is given to the effect that all tenants whose accounts were in good standing at 29 February 2020, can be assured that there will not be any evictions for the next two months.
It is reported that landlords will, on a case-by-case basis, also consider providing relief for office, industrial and hospitality tenants where the lockdown severely impacted the tenant and where it is justified.
It further suggests that tenants need to negotiate relief terms directly with their landlords.
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