Property industry wants government mediation in retail rent dispute

Group increases rental relief and assistance measures for retailers, as lockdown continues.
Tough negotiations: South Africa's major retail landlords continue to negotiate with big clothing retailers around rent payment during the Covid-19 lockdown. Image: Moneyweb

The Property Industry Group (PI Group), an alliance of South Africa’s biggest retail landlords and JSE-listed real estate investment trusts (Reits), has called on the government to come in as a mediator to help resolve the impasse around major retailers paying some form of rent during the Covid-19 lockdown.

In a statement released on Tuesday morning, the group announced “increased and extended” rental relief for most retail tenants, but noted it is yet to secure a deal with the newly-formed Clothing Retailer Group (CR Group), which represents Pepkor, The Foschini Group (TFG), Truworths, Mr Price Group and Woolworths.

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As part of its new wider relief guidelines, the landlord alliance has doubled its rental discount for April offered to major clothing retailers that have been forced to close due to the Covid-19 lockdown. It is now offering a 70% rental discount to such retailers that have a turnover of more than R1 billion.

This comes as government has effectively extended the national lockdown in the form of various lockdown levels, which will still see many businesses either not being allowed to trade or facing stringent trade restrictions.

“Despite constructive negotiations between the groups and considerable compromises on both sides, we have been unable to reach an agreement on the extent of the rental relief,” the PI Group said in its latest statement.

Commenting on the situation, Estienne de Klerk, spokesperson for the PI Group and Chairman of the SA Reit Association, called on government to come in as a mediator for sort of resolution.

“Unfortunately, despite both parties moving closer together we can’t find a final meeting point on the level of rental discount, and the refusal by the CR Group to pay their share of rates and taxes remains the major point of disagreement,” says de Klerk.

Estienne de Klerk, CEO of Growthpoint Properties SA, who is also spokesperson for the Property Industry Group and Chairman of the SA Reit Association. Image: Supplied

“Both sides, however, appreciate that our fortunes are inextricably linked, and we need each other for the success of our businesses. We value the longstanding relationships forged between members of both groups. To preserve these relationships, and avoid a protracted process, we are proposing the national government as mediator to provide a mutually beneficial remedy,” he adds.

After several major clothing and other retailers threatened not to pay rent for April, the PI Group was formed. It has the backing of the SA Reit Association, South African Property Owners Association (Sapoa) and South African Council of Shopping Centres (SACSC), as an industry response to the Covid-19 pandemic and the economic fallout from the lockdown.

The CR Group later came together and offered to pay landlords around 20% of rentals for April. This counter offer was in response to the PI Group’s initial proposal of a rental discount of 35% to major clothing retailers for the month.

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With the discount now increasing to 70%, the landlord alliance will be hoping to finalise a deal before the end of April, as many clothing retail giants have yet to pay and are anchor tenants in South Africa’s malls and city centre properties.

Meanwhile, the PI Group reiterated in its statement on Tuesday that while its new guidelines aimed to offer greater relief to all affected retailers, the hardest-hit small, medium and micro enterprise (SMME) retailers will be prioritised.

“To sustain retail tenants during the lockdown, the property industry’s assistance guidelines offer relief for all affected retailers, regardless of size. SMME retailers, however, are the focus of the initiative,” it said.

“The PI Group proposes that small and micro retailers are given rental discounts of up to 100% for April, with further substantial rental discounts and interest-free rental deferrals for May and June respectively,” it added.

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

As part of its wider relief guidelines, the group said it has increased the extent of assistance, introduced more retailer categories, provided additional options for some retailers and extended the benefits from two months to three months – April, May and June 2020.

“The retail tenant assistance and relief guidelines exclude office, logistics, warehousing, industrial, healthcare, hospitality and other tenants,” the PI Group said.

“These tenants should discuss their specific situations directly with their landlords, who will consider them on a case-by-case basis without reference to the retail tenant assistance and relief guidelines.

“Adding to its far-reaching relief impacts, the PI Group is committed to continuing paying its suppliers in full, including cleaning and security providers, and taking on the increased cost of enhanced hygiene to protect against the spread of Covid-19. This is helping to preserve thousands of jobs nationwide,” it added.

“The PI Group is also paying its rates and taxes, which are vital in supporting the sustainability of municipalities countrywide and by extension supporting the grass level communities and households among which both property and retail sectors conduct business,” it noted.

The landlord alliance has also stipulated that as part of its assistance and relief guidelines, all tenants with accounts in good standing at 29 February 2020, will not be evicted during the lockdown period and will qualify for some form of assistance from participating landlords.

“Retailers would need to apply to their landlords directly for assistance. Each participating landlord can offer additional relief and support on a case-by-case basis at their discretion. However, the guideline for retail SMMEs is the minimum that qualifying retailers can expect from participating landlords,” it said.

De Klerk says the updated retailer assistance and relief guidelines will come at an enormous cost to the property industry, which faces its own “ominous” set of challenges.

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

“SA’s property sector has voluntarily committed to the relief guidelines even though it hasn’t received any sources of relief, and we’re shouldering our share of the pain,” he adds.

“We are paying our full obligations while giving retail tenants substantial discounts and we have gone as far as we can in assisting retail tenants with our updated proposal. Our entire value chain is only as strong as the weakest link. If all the pressure continues to be placed on a single link, it will break and result in systemic collapse that will be felt in every household in SA,” De Klerk says.



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Sound very generous dont the REITS: However the truth is that not they but their Shareholders are in the guys “suffering” !
Not only have the shares lost something like 80Pct in value but
Dividends are cancelled/Postponed so as usual the poor old Pensioner now
subsidises RSA Retail outlets : HOO Boy

Shareholders including most pension funds

no, asked to subsidize incompetent property management/owners

NO wrong,

Retailers are asked to subsidize incompetent property owners/managers.

These idiots were on a boat clearly oblivious to the risk that the world pandemic had.

Why must retailers pay rates and taxes?
They did not have the use of the property and it is not their property.

Property barrons are composed mostly of those that like to always win…well not this one.

The long and the short : No trading no rent, whatever the disappointment for the landlords.

In that case perhaps the CR Group can pay back all the generous Tenant Installation Allowances and custom fit HVAC and shopfronts, electricity and lighting upgrades and the like given to them when they moved in?


Cool, I hope Pep and Truworths take the same approach to cancelling the April capital and interest and funeral insurance and disability insurance the tens of thousands with credit accounts at Pek and Truworths that had a no work no pay April.

We will see what Prep and Truworth annual revenue difference is year over year. consumers will simply go and buy their cheap imported wares later.

You definitely correct, the non-payment of rent must go back to benefit the customers of every tenant not paying, landlords should get some kind of tax break or payment holiday from either government or banks. Rentals as part of income, just as salaries are needed by the average Joe, everyone will have to come to the table.

Well I am not going to pay any accounts either starting with my Municipal bill.

Imagine most of them are sitting at home on full pay and many of the services are not available?

In addition Maybe it is time for the value of my property to be adjusted. I guess it has dropped by maybe around 20%? Everyone knows values have dropped.

What does that mean. The municipality needs to chop its budget starting with a bloated and overpaid workforce.

That is a reality check. But, of course Municipalities live in a dream world.

Evict the non paying parasites !!!!!!

That’s hardly a solution. So if you can’t pay your bond as you may have lost your job, would you be comfortable being turfed off your property as a result of not servicing your bond?

Totally –

If one does not like the very foundations of capitalism then states like North Korea, China, Russia Venezuela etc are very good alternatives —

On second thoughts just stick around – state property coming to your suburb via expropriations real shortly ne !!!!

haha.. you are stupid

I hear what you say but should it not be the guy that’s been closed by the lockdown that should then ask for a bailout and still pay his rent?

Why should it be the guy that has not been affected. I know all has been affected but strictly speaking the property owner has not lost any tenants and has still supplied the space?

If you cat pay your bond it is you that needs the bailout not the bondholder.

Arrest the parasitic landlords, wanting rent when the tenant cannot benefit from the occupation.

It’s tough out there. I really hope and pray a Vaccine and a solution to this problem is found soon.

This is not for Govt to decide or mediate, but for courts to decide.
Just take the matter to court, its a force majeur matter.

The answer’s simple – it merely requires all parties to act in a mature fashion and to get together and find an accommodation. Both parties are going to end up losing something. The main onus though is on each tenant as they need to motivate for their own circumstances.

Tough times – 70% discount is fairly considerate, considering the onerous obligations of debt repayments, etc.

Why is the landlords debt structure the tenants problem?

Stupid point. Every business including retailers have financing and other obligations. And nobody builds a mall with cash, and even then there should be a return on that cash invested. Where a pension fund financed the building, you’d prefer the pensioners to take ALL the pain while the retailers keep their stock and branding for free in the building. This situation calls for fair sharing of the pain. All the pain cannot fall on building owners/pensioners/financiers, and it looks like the property companies are offering to take a very significant share of the pain

This situation was insurable.

Why did some insure for it an others not?

No again, “all the pensioners” did not make the investment decision, why are the managers of the fund not held responsible?

Typical fin guru bullshit, take ZERO responsibility of incompetence.

heads I win and tails socialism the loss

When I got financing for my rental properties one of the clauses I signed was that if I did not pay the bond the bank could collect my rentals. I assume these other investors have similar clauses. So maybe the banks could try their luck at making retailers pay?

End of comments.




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