Lockdown: JSE-listed retail giants offer landlords a fifth of rent

In a counter offer amid intense negotiations.
Retail clothing giants Truworths, TFG, Mr Price, Pepkor and Woolworths are behind the counter offer. Image: Supplied

South Africa’s biggest JSE-listed clothing retailers and landlords are making headway in their negotiations. It seems both sides are making concessions around rental payments for April, which is virtually a write-off due to retailers not being able to trade during the Covid-19 lockdown.

At the weekend a newly formed forum representing the country’s five biggest clothing retailers – Pepkor, TFG, Truworths, Mr Price and Woolworths – offered to collectively pay landlords around R220 million for April rent, which they say is equivalent to around 20%. This is in addition to utility costs for services such as water and electricity.

The move comes as most of these retailers, together with other players such as KFC and Dis-Chem, originally served landlords with letters stating that no rentals would be paid for April due to the government-imposed lockdown.

Read: Lockdown: Pepkor won’t pay retail landlords either

Known as simply as the “Retailer Group”, the forum of the big five clothing retailers said in a statement that it is now in discussions with the Property Industry Group (representing JSE-listed retail landlords) in a bid to find “a joint and mutually beneficial response to the significant challenges” brought on by the lockdown.

Last week Moneyweb reported that the Property Industry Group had come up with a package of rental relief measures for various types of landlords, from small businesses to major retailers. The group is a joint initiative of the South African Real Estate Investment Trust Association (SA Reit), the South African Property Owners Association (Sapoa) and the SA Council of Shopping Centres.


Retail landlord alliance reveals Covid-19 relief package for tenants

Covid-19: Priority is to save smaller retailers, say landlords

The package offered the most extensive relief to smaller players such as independent line shops and restaurants, while major retailers were offered a rental discount of 35%.

This week’s counter offer from the Retailer Group is likely to see even more intense negotiations with retail landlords.

The Property Industry Group represents the country’s major listed Reits, which means small independent landlords will have to have tougher direct negotiations with retailers threatening not to pay rentals due to the lockdown.

“The adoption of an empathetic and constructive approach is vital to finding a workable solution benefiting all stakeholders,” the Retailer Group said in its statement. “The retailers commend the government for instituting regulations to allow collective negotiations in the retail property sector in order to mitigate some of the negative economic impacts of the lockdown.”

‘Balanced, equitable’

The forum noted that it had “reviewed the scope of the relief package” offered to retail tenants by the Property Industry Group, however, it had now constructed its own counter proposals. The group said it believes that its proposals are “more balanced” as the offer deals “more equitably with the permanent loss faced by retail tenants” countrywide.

Read: SA Reits wants tax relief from Covid-19 fallout

“The devastating economic effects of Covid-19 should be shared by both landlords and tenants … In constructing our proposals, and due to the divergent nature of our operations, we had to find a guideline that we all agreed on, to help shape the most appropriate response in these unprecedented circumstances,” the group added.

“Despite earning no revenue during lockdown, and in the interests of collaboration and reaching agreement with [the] Property Industry Group, [we] have provisionally put aside the opinions of [our] legal advisors during the negotiation, which state that rentals are not due during lockdown,” it pointed out.

The Retailer Group has proposed, in the form of a general guideline to the industry, the payment of all utilities consumed by retailers during lockdown, and 20% of normal rental and operating costs.

“This equates to support by the five retailers in excess of R220 million to support landlords during the lockdown,” it noted.

“Landlords are expected to significantly reduce operating costs to take into account declining economic activity,” it added.

Meanwhile, the retail forum said it “wholeheartedly supported” the “prompt and firm action” by President Cyril Ramaphosa in the face of the Covid-19 pandemic.

However, it pointed out: “The undisputed fact is that the lockdown period has resulted in the retailers being barred from using their rental premises for their intended purpose.

‘Cascading devastating effect’

“This has a potentially disastrous effect on our ability to meet our employment and other commitments, which may in turn have a cascading devastating effect on millions of South African households,” it added.

“The current lockdown affects the entire retail ecosystem, as well as the interests of government, in deploying the taxes we pay, and other important stakeholders in our broader national context.

“Hundreds of thousands of South Africans earn a living from employment by retailers, and millions directly and indirectly live off this income through jobs with our suppliers,” the group stressed.

It acknowledged that landlords also face their own economic pressures.

“It too will inevitably be negatively affected by the Covid-19 outbreak, just as no sector of the economy will emerge unscathed.”



Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


Priority is to save smaller retailers, say landlords


What about pensioners in particular who are dependant on what were attractive dividends ??Just thrown to the Wolves ?

What about them? Surely they were diversified properly and did not invest all of their pension money property?

Pensioners rely on investment returns such as fixed deposits or dividends on equities. They never get increases, they pay 20% dividend tax and now their fixed interest investments will pay less due to the interest rate drop. I suspect that is what ‘Edalsg’ was referring to in his contribution above.

Amazing how property punters have conditioned most that property is safe and MUST ALWAYS give a return.

Well the landlords that are supposed to managed large portfolios seems were conditioned themselves and did not account for this grey swan what not take insurance for it..

Chris…dividends are paid to pensioners on a wide range of investments managed by the likes of Allan Grey. Not sure why you only refer to property .

Chalky, it seems as if some have only invested in property and nothing else. This pensioners and property comes up often.

I am willing to pay 20% of the value of my shopping at Wollues.

If you planned to go to Pep to buy clothing for R200 but it was closed and you couldn’t buy anything, would you still pay your full R200 to Pep, offer 20% or would you pay zero?

It’s the exact same for Pepkor. They planned to be open in April but their stores were closed and they couldn’t sell anything.

That is Exactly the point.

I am amazed at how many people think the retailers are taking. Chance.

The retailers operation has come to a complete stand still.

The landlords cannot expect to keep 100% rental.

I say , if you are open pay 100% rent (like dischem), if you are closed , pay zero % rent.

The fact that these clothing guys are paying even a portion of rent is actually still unfair to them.

If I were Pepkor I would pay 0% for shut down period.

“Dis-Chem, originally served landlords with letters stating that no rentals would be paid for April…”
Did Disc-Chem ever voluntarily pay more rent for a good month?

Actually, DisChem have come out of this very badly, their warehouse smoke-and-mirrors re warehousing – solely designed to put ever more billions into the pockets of the already filthy rich owners – have clearly demonstrated massive corporate greed. ‘Pharmacists who care — for your wallet’.

The RAG’s vs. the PIG’s. Wonder when the PIG’s are going to issue the Banks with a letter to withhold loan payments

IMO the landlords must not be entitled to any rent during lockdown period.The premises were not used for intended purpose and retailers were already operating on constrained cashflows and thin margins,now where are they supposed get the money from ?
Good thing is that the retailers have organised themselves and have move bargaining power as it were.
I am behind retailers on this one.

If the retailers are in trouble ask for a bailout. FROM GOVERNMENT! Don’t expect to get away with being such opportunists.

Woolies are still selling food? Maybe close them down totally?

This is a tough situation, what people dont realize is the “landlord” isnt some greedy fat cat sitting in his study at night counting out the rent cheques at the end of the month, nor is it simply a case of “oh well the banks are deferring the interest payment so everythings good” There is an entire ecosystem below, the landlord pays security, electricity, rates, cleaners, management teams (the malls dont just manage themselves with management being more intensive now given restricted access and additional cleaning and sanitizing) insurance, maintainence, waste removal not to mention dozens of contractors and suppliers and dividends…. to many peoples pension funds. So to just say landlords must suck it up is unfair. Many of these national retailers are also paid generous fit out allowances and custom fit HVAC systems etc- these too are often financed by the landlord, thus with no rent these items too dont get paid for, its too simplistic a few to just say dont pay as the shops closed, somebody pays at the end of the day. The fair thing would be to go 50/50, two weeks free rent, two weeks rental paid for the month lockdown that way perhaps a compromise is reached at a midpoint, the pain is shared.

How on earth is 50/50 fair when the retailer is getting ZERO income and the landlord getting 50% (plus 100% from essential services)

Yes there is a whole ecosystem. The retailer also has a whole ecosystem.

I am not a retail landlord nor retailer but predict that if these parties do not reach a more sensible solution this will end very badly in court for the retailers. Some astoundingly poor strategy likely built on equally poor legal advice. But then, the lawyers get paid either way :/


Normally you “know your stuff” , not on this one…

Legally , the retailer owes the landlord nothing….


Yes, I have also seen some of the opinions floating around from different firms. In general the retailers will CERTAINLY lose if they aim to pay 20% unless they had a pretty weird force majeur clause.

Just the value provided by the landlord in providing safe secure storage of the retailer’s goods and equipment and ongoing access will sink the 20% offer.

for me, other than specific cases like restaurants and bars and maybe hair salons, their revenue over a year will not be materially enough impaired. Many retailers anyway have revenue clauses that determine their rent. There was a piece about how the shopping in the days leading up to lockdown broke Black Friday records – without discounted prices. The days after lockdown will similarly see big revenue. Dischem is especially objectionable to the extent that I will avoid them in future.

End of comments.



Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.

Follow us:

Search Articles:
Click a Company: