Commercial landlords were greeted with some good news in July as rent collections for retail properties increased by double digits compared to May and June, GlobeSt.com reported.
A survey by Datex Property Solutions, the California-based real estate portfolio management company, revealed that retail rent collections were 68.8 percent in mid-July, a nearly 15 percent increase compared to mid-June and a 36.6 percent increase compared to mid-May.
Researchers said the increase in rent payments was due, in part, to the initial reopening of the economy.
“As we have gotten our arms around how to reopen the economy in the face of an active pandemic, more retail categories have been able to return to partial or full operations,” Mark Sigal, CEO of Datex Property Solutions, told GlobeSt.com. “This has enabled more retailers to generate income, and as we know, income is the oxygen needed to pay rent.”
As governors reopened stores earlier this summer, shopkeepers used forgivable loans from the Small Business Administration's Paycheck Protection Program (PPP) to hire back staff and pay rent, the survey said.
“Landlords have worked closely with retailers to help them secure PPP loans, and in tandem, negotiated a lot of rent relief agreements, which has provided a backstop for retailers to bridge the storm, so to speak,” said Sigal.
It’s unclear what will happen with rent collection going forward, since the surge in COVID-19 led to re-closures in some states.
“This is the great unknown in that certain retail categories, like apparel, gyms and movie theaters, have a much thinner needle that they can thread than, say, supermarkets and fast-food operators, which are navigating the environment reasonably well,” said Sigal. “My general sense is that there is more pain ahead, but that that pain may already be factored in, given that collection trends remain 10-20 percent below historical averages.”
The Datex report stands in sharp contrast to a Financial Times report from Sunday (Aug. 9), which found that 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. Some of the harder-hit types of businesses, including movie theaters, paid only “pennies on the dollar” to commercial landlords.
One disparity in rent payments has been between private-equity-owned businesses and public ones, with private businesses paying less rent.