Retail chain refuses to pay rent in stand-off with retail landlords

Talking to some lawyers, they've had a huge number of enquiries as to what constitutes force majeure. A lot of tenants will be able to cancel their lease if the Corona Virus classifies as such. Will be some time before there's clarity

 

I really need to get myself some friends in higher places!

 

Nice to have friends in high places.

 

How do you guys think about, in the worst case, shopping centers may temporarily become hospitals / isolation centers?

 

Most big spaces would do. Convention centres for example.

 

Melbourne Convention Centre is being lined up as hospital/morgue. Echo of 1919 when the Exhibition Building was so used. https://www.theage.com.au/national/...d-19-hospital-and-morgue-20200326-p54eab.html

 

AFAIK, food courts are closed. The lessor isn't providing a premises that the tenant can use.

Change of use from child care centre?

 

im pretty sure there will some clause in the shopping centre lease somewhere that means they still have to pay rent and there will be no get of jail free card

 

The centres can't unilaterally provide a rent reduction without going to their boards (& if listed making an announcement to the ASX etc) - see my previous comments.

 

Maybe the big shopping centres had it. When we used to open hospitality in Vicinity or Scentre we never had that though. Nor do we charge it on our tenants but perhaps hospitality is different to retail - although I’ve heard of it for big things like supermarkets.

 

Ahhhh never buy a shopping centre. Can’t afford one anyway

 

Still doesn't apply to tenants which are not traditional retail types eg banks, real estate agencies, mobile phone shops, health funds etc.

 

Share property losses with tenants as well. Great idea !

 

Legally cant, watertight there is no clause that you can get out, just grand standing

 

All Myer branches closing from Sunday - https://www.smh.com.au/business/com...-response-to-coronavirus-20200327-p54eqs.html

Troubled department store Myer has joined the swathes of Australian retailers closing doors and standing down staff, announcing late on Friday night it would shut its 60 stores from close of business Sunday for at least one month.

The company said in a statement to the stock exchange it would stand down 10,000 staff during a shutdown it expects will last until at least April 27.

 

Fair enough, but if the landlord wants to share in Premier's profits, then maybe they should buy some stock.

Then they can give Sol a bit of stick at the AGM.

 

Myer share price was 350 cents per share 10 years ago. It's now 10 cents a share.

 

I don't want to share his profits, but I don't want to share his costs either, that's all.

 

Yeah, but one might consider that the landlords are cut from the same cloth, so eventually when Sol and Mark want to re-lease a bunch of stores in their centres, then maybe the "smart" centre managers (and I also don't mean in the moral sense) will tell them to "go try the strip malls".

It's arguable that the Jay Jays, Just Jeans, Portmans and Jacqui E brands would immediately be toast, and Peter Alexander and Smiggle, as higher tier brands would be accepted, but under more onerous conditions.

It's obvious to anyone who has been in retail for more than 5 minutes that Sol and Mark are definitely not stupid, but neither are the larger centre landlords, and all of them have been around the block a few times..

 

I must have read " If that's how we want to play it, I want to enter into leases where I get 50% of the net profits or 15% of revenue." this wrong, but at the same time, I sort of get your drift...