Retail landlords are getting squeezed from both sides

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.