Retail landlords are getting squeezed from both sides

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

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. 

Recommended

The best 0% balance-transfer credit cards
Credit cards

The best 0% balance-transfer credit cards

These 0% balance transfer credit cards offer some of the best deals on the market today.
26 May 2023
Where do we go from here?
Investments

Where do we go from here?

A new series of interviews from MoneyWeek
26 May 2023
Best savings accounts – May 2023
Savings

Best savings accounts – May 2023

Interest rates have been creeping up - we look at the best savings accounts on the market right now.
26 May 2023
The best one-year fixed savings accounts - May 2023
Savings

The best one-year fixed savings accounts - May 2023

You can now earn 5% on 1 year fixed savings accounts - the best rate seen in 14 years. We have all the latest rates available now.
26 May 2023

Most Popular

Nationwide to give £100 cash boost to customers
Personal finance

Nationwide to give £100 cash boost to customers

Nationwide Building Society is giving customers £100 as it reinvests profits. Dubbed the Nationwide Fairer Share scheme, we look at who is eligible.
22 May 2023
The best one-year fixed savings accounts - May 2023
Savings

The best one-year fixed savings accounts - May 2023

You can now earn 5% on 1 year fixed savings accounts - the best rate seen in 14 years. We have all the latest rates available now.
26 May 2023
Energy price cap slashed by 17% ‒ millions to see lower energy bills
Energy

Energy price cap slashed by 17% ‒ millions to see lower energy bills

Typical households on default energy tariffs will see their energy bills drop by £426 a year following today's energy price cap drop.
25 May 2023