To include pandemic escape clauses and further mitigation, certain retail renters are seeking to recast their leases. Many retail leases restrict the occupant from seeking an abatement due to interruption or "force majeure" clauses, but counsel for renters indicate they are pushing to have these measures be part of new agreements, The Wall Street Journal reported.
Landlords have said that other renters are seeking measures that freeze rent payments during periods when shops are shuttered indefinitely, and allow for variable rent payments when stores reopen. Some reportedly won’t consider such measures as the sharing of sales data or rental extensions.
However, select commercial landlords indicated they could allow rent deferrals for a shorter period of time in the event that an additional shutdown occurs. And certain property owners have alluded that they could be open to lease adjustments as more merchants explore seeking bankruptcy protection.
Landlords could feel compelled to renegotiate, as many tenants have indicated they aren’t paying rent next month given the current state of affairs.
EastBanc Principal Philippe Lanier said, per the report, “I am prepared to rewrite leases. I am prepared to grant rent relief, rent abatement, if that’s what’s needed, if that’s the only way forward. I will use every tool that I can to make sure the tenant reopens.”
As previously reported, Empire State Building Trust detailed its retail collection efforts in a call with analysts on April 23. It indicated that it had collected 69 percent of April rent charges as of April 20, portioned between 73 percent for office occupants and 46 percent for retail occupants. The company took in requests for rent referral from 170 office and rental tenants that comprise 32 percent of its annual rental revenue, per a previous report.