Clothing retail giant TFG has confirmed to Moneyweb that it has decided to suspend store rental payments for April due to the lockdown declared by President Cyril Ramaphosa, which has resulted in the temporary closure of all its stores in South Africa.
The Cape Town-based group has more than 3 000 stores globally – in South Africa, several other African countries, the UK, Australia and other regions. However, its South African operations account for the bulk; the group has some 2 500 stores locally, covering more than 750 000 square metres of retail space.
“The decision [not to pay rentals] was not taken lightly and has been guided by legal counsel,” Brad Rothenburg, TFG’s head of property, said in a short statement on Monday.
“We understand that the lockdown places many sectors and the economy under tremendous pressure. In these extraordinary times we must find ways to navigate the current climate, find solutions to mitigate the impact and ensure business continuity,” he added.
TFG’s statement follows news agency Bloomberg reporting at the weekend that the group had sent letters to landlords in South Africa informing them of its decision not to pay rentals due to the Covid-19 lockdown.
It also comes in the wake of Moneyweb reporting earlier on Monday that commercial property industry body, the South African Property Owners Association (Sapoa), believes the “unilateral move” not to pay rent is unlawful.
Sapoa, the South African Real Estate Investment Trust (Reit) Association and the SA Council of Shopping Centres were due to hold a teleconference meeting today to thrash out the issue of non-payment of rentals and the potential impact of Covid-19 on the retail property sector.
Meanwhile, TFG noted in its statement that rentals are paid in advance and therefore the suspension of payment will affect April rentals.
“The group will assess the full financial impact once the situation stabilises, and engage with landlords in this regard,” Rothenburg noted.