Retail landlords are getting squeezed from both sides

The coronavirus lockdown is worsening what is already a prolonged crisis for many commercial landlords.

© Shutterstock
(Image credit: Brent Cross Shopping centre © Beretta/Sims/Shutterstock)

Shares in the property company Hammerson, which owns several shopping centres, have plunged by a fifth in the past few days. The group was paid only about a third of the quarterly rent it was due last week “as cash-strapped retailers struggled to survive” the crisis, says Julia Kollewe in The Guardian. It has been “deluged with requests for rent deferrals, cuts or waivers”: most retailers have been forced to close. Hammerson has scrapped its dividend to conserve cash.

No wonder, says Miles Costello in The Times. The lockdown is “deepening” what has already been a “prolonged crisis” for many commercial landlords, who are “battling” to respond to the downturn in trading at bricks and mortar stores. They are “facing a squeeze” from both sides. Tenants are “baying for rent reductions and waivers while they are unable to trade”. At the same time lenders are still “demanding repayments on their loans”. While Hammerson isn’t as highly leveraged as rivals, its £2.4bn of net debts are equivalent to a “very high” 8.9 times earnings.

Both British Land and Intu Properties are also having to take emergency measures, says Ben Chapman in The Independent. British Land has suspended its dividend and is supporting its retail tenants by granting rent relief and delays. Intu is perhaps doing worst of all, receiving only 29% of rent due in the first quarter of 2020. So it is in talks with its lenders to “relax the rules” on its own multibillion-pound debts. It is also in an “ongoing dialogue” with the government about further loans from its £330bn bailout package.

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Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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