Mall tenants in limbo over rental relief
Mbongeni Mguni | Friday May 8, 2020 18:51
When the coronavirus (COVID-19) lockdown kicked in on April 2, a majority of tenants in malls closed their doors and despite not having made any revenue during the month. BusinessWeek is informed that most property owners demanded their lease dues at the end of the month.
By contrast, in South Africa, the Property Industry (PI) Group, a collective of the major representative bodies for real estate in SA, launched guidelines for assistance and relief for retail tenants on April 7, 2020 and later extended these to all affected retailers, especially the hardest-hit SMME retailers.
The PI Group, comprising the SA REIT Association (SA REIT), SA Property Owners Association and SA Council of Shopping Centres, has extended lease payment relief for up to three months, with SMMEs in particular receiving the bulk of the assistance.
In an emailed statement to BusinessWeek, the PI Group said the relief recognised that the value chain of the property sector included thousands of jobs directly and indirectly through service providers such as security, cleaning, hygiene and technical services.
Locally, mall tenants are an important employer of young Batswana and a key platform for SMMEs and entrepreneurs.
However, property owners have reportedly taken a disjointed approach to helping their tenants, with no common nor industry wide position. Industry insiders said property owners were taking advantage of the absence of compelling regulations from government on the matter. Molapo Crossing Mall owner, Vandecasteele told BusinessWeek that his company has offered tenants a 40% deferral of lease obligations in May, amongst other considerations. SMMEs make up the majority of Molapo Crossing’s tenants. “This is based on the deferral granted by the banks,” he said. “Unfortunately, we will have to pay extra interest to the banks, but tenants will get the cashflow relief we are offered.”
Khumo Properties, which owns and manages several landmark properties around the country, including Airport Junction in Gaborone, is reportedly considering a rent deferral, but is yet to make a final decision, insiders told BusinessWeek. Khumo Properties CEO, Outule Bale could, however, not be reached for comment on Wednesday.
Real Estate Institute of Botswana vice president, Samuel Ramakopa told BusinessWeek that the organisation was urging both property owners and their tenants to dialogue over how to handle lease obligations during the COVID-19 crisis. “From our side, we have been advising that there should be discussions, dialogue between property owners and their tenants to come up with agreements on perhaps deferring payments or how to settle these later,” he said. “Both parties need each other, even after this crisis. Each of them also has costs to bear during this period.
“Where they don’t agree, they can look for an arbitrator to advise them.”
Ramakopa said thus far there had been no word on a common position by property owners towards tenants’ lease obligations.
Various government representatives have said mall tenants, like other affected businesses, are expected to tap into the wage relief subsidy provided by government, as well as the P1 billion in government guaranteed loans from banks. Tenants and property owners are also expected to take advantage of the repayment holidays granted by all banks for the coronavirus period.