Pandemic-ravaged businesses are having trouble meeting rent during the coronavirus pandemic, as evidenced by the fact that many tenants have only partially paid for July, Financial Times (FT) reported.
Some of the harder-hit types of businesses, like movie theaters, paid only “pennies on the dollar” to commercial landlords, FT wrote.
Collection rates are better than they were during the earlier phases of the pandemic, but FT wrote that they're still well below the pre-pandemic levels of rent payment.
One disparity in rent payments has been between private-equity owned businesses and public ones, with private businesses paying less rent. Weingarten Realty, for example, owns 165 properties of a variety of types, and has seen high degrees — almost 100 percent — of rent collection from businesses like banks, supermarkets and liquor and wine stores.
However, other types of businesses like discount clothing stores or health clubs have been less consistent, with only 75 percent from clothing stores and 48 percent from health clubs. And even though some stores are reopening, lower retail traffic due to the ongoing pandemic still isn't bringing in pre-pandemic sales levels.
Retail lease defaults, according to PYMNTS, have a “ripple” effect, in which landlords and property owners are then in danger as well. A report quoted by PYMNTS found that some landlords only have about one month of forgiveness left, while some like Simon Property Group have less than even that.
Property executives have said they're OK with being flexible to aid struggling tenants. Some of the ways they've tried to help include striking deferral agreements and moving monthly rents to leases tied to revenues, according to FT.
However, some clients are believed to be able to pay. National retailer Gap, for example, is currently engaged in a legal battle over rent payments. Gap has said its inability to operate during quarantine made it hard to pay rent, countersuing to get the claim deemed invalid.