Mattress Firm and Subway are among the major U.S. retailers that don't want to pay rent in full due to the coronavirus' effects on the country's economy, Bloomberg reported, which could set up a brawl with landlords and officials in the coming weeks as the first of the month approaches.
Both chains are among the many that have had to close stores and slow operations as COVID-19, the disease caused by the coronavirus, necessitates less in-person contact amid its contagious tendencies.
The chains are calling for rent reductions as the crisis rolls on with no end in sight in the near future. That could be done through lease amendments, and as April nears, the courts are likely to see a deluge of disputes in this vein between landlords and tenants.
Landlords are pondering what exactly happens to the rent normally paid to them; they can't afford to skimp on payments forever, saddled with debt as many are, the report noted. The questions as to how that will be addressed are likely to become further muddled, particularly as the current talks in Congress do not address the matter.
Mattress Firm sent its landlords a letter last week offering options for how the situation could be mitigated, according to the report. It said it would pay less in rent in exchange for longer leases, citing the decline in revenue and store closures as reasons, both spurred by the viral pandemic. Mattress Firm has around 2,400 stores in the country.
Subway, with 20,000 locations, has been analyzing various ways to address the problem and sent out a letter to its landlords saying it might not pay rent in full.
Landlords are working to address the issue as well. Irvine, California-based Irvine Company Retail Properties, is letting rent be deferred for 90 days on the condition it's paid back later, starting next January. Detroit-based Bedrock is waiving rent and fees for three months.
The coronavirus thus far has disrupted almost every aspect of American life as businesses close, people stay home and hospitals overflow with the sick.