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Tough times for property owners after lost ‘golden quarter’

Tough times for property owners after lost ‘golden quarter’
Tough times for property owners after lost ‘golden quarter’

This year, following the national lockdown in November and the strict tiering rules that effectively replicated the lockdown in many parts of the country forcing many retailers and hospitality businesses to close, that was emphatically not the case.

On Monday, British Land reported that, for the December payment, it collected less than half the rent it was due from retail clients – some 46% – although office clients were in a better position, with some 96% paying up.

The company, which owns the Broadgate estate in the City of London and the Paddington Central development in west London, revealed it is also still owed money from some retail tenants for previous quarters – with just 49% of March rent collected, 73% of June rent collected and 72% of September rent collected.

Tuesday brought updates from other players in the sector.

Land Securities reported that it had collected 65% of the £112m it was owed in December, with regional retail clients paying just 36% of what they owed, while retail, leisure and hospitality tenants in London paid just 29% of what they owed.

It also noted that, following insolvencies of companies such as Peacocks and some Company Voluntary Arrangements (CVAs) among clients, the total amount of rent due had fallen by £15m while discounts and deferred payments agreed with tenants brought the total down by a further £29m.

That took the total amount due down from £553m to £509m – and, of that, some £408m had been collected.

Things were somewhat better at Derwent London, which specialises in office space, including sites such as the White Collar factory in Old Street and the Tea Building in Shoreditch, both on the northern and eastern fringes of the City.

One of the most highly regarded players in the sector, boasting a number of tenants in the tech industry, it said that it had collected 83% of London rents including 87% of office rents due to it.

But the picture overall is of a sector that remains under intense pressure.

Adding to its woes is the government’s moratorium on evictions of businesses that fail to make their rental payments during the current COVID-19 crisis.

This had been due to finish at the end of September last year, was extended to the end of the year and then, last month, was extended to the end of March this year.

Commercial landlords have argued that the moratorium has been abused by profitable companies that could afford to pay their rents but have been deliberately not doing so.

John Cahill, analyst at stockbroker Stifel, said of the Land Securities update: “None of this will come as a surprise to the market, given the difficult trading environment for its non-office tenants and the moratorium on evictions across the UK.”

Even before COVID-19, shares of the likes of British Land and Land Securities were struggling to convince investors that retail was only one part of their business, putting their shares under pressure.

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