Will Dis-Chem treat all landlords equally?

How will it determine rents payable to related parties?
Dis-Chem continues to trade and its executives have ownership stakes in its warehouses, but ‘is looking for relief’ and ‘wants to be treated in the same manner as all other providers of non-essential trade’. Image: Waldo Swiegers, Bloomberg

Dis-Chem has caused some consternation among the country’s largest landlords given its decision to not pay April rents in full.

Business Times reported on Sunday that it has withheld rental payable (excluding contributions for rates and utilities) to property companies – including Resilient, Hyprop, and Liberty Two Degrees – despite continuing to trade as an essential service during the countrywide lockdown.

But the pharmaceutical retailer contends it has paid “a fair and significant portion of the base rental together with suggesting a turnover-based rental”.


CEO Ivan Saltzman says: “There is a perception in the market that if your business has elements of essential services it is business as usual. Non-essential goods contribute significantly to our normal turnover and essential goods are traditionally much lower profit items.

“A greater proportion of our essential goods are medicine sales which yield much lower profit margins and pricing remains restricted by the gazetted single exit price.”

While footfall has admittedly been lower, the group’s position is curious given that according to its own disclosure, essential goods comprise the bulk of its retail turnover. Dispensary, baby care, the majority of healthcare and nutrition, a not-insignificant portion of personal care and beauty, and a portion of ‘other’ would fall into government’s categorisation of “essential goods”.

Source: Dis-Chem Integrated Report 2019

However, valid questions have been raised about the rentals due for its major warehousing facilities. These four warehouses – in Midrand, Cape Town, Delmas and KwaZulu-Natal (New Germany) – are owned by a complicated structure of trusts and companies owned by a number of the group’s current executives, primarily founders Ivan and Lynette Saltzman.

Total rent paid for three of the four warehouses in the year to February 28, 2019 was R101 million. It does not appear to be paying rent for the Delmas warehouse. A further R31.9 million in rent was paid to related parties disclosed simply as “various property companies” in the group’s 2019 integrated report.

Facility Company Related parties Rent paid for the year to Feb 28, 2019
Midrand distribution centre and head office, call centre Columbia Falls Property 7 (Pty) Ltd 50% by the Dis-Chem Adventures Trust, of which Ivlyn (Pty) Ltd is a 78% shareholder R64.128m
KZN warehouse Josneo (Pty) Ltd Adventure Commercial Holdings (Pty) Ltd, of which Ivlyn (Pty) Ltd is a 76% shareholder. I Saltzman, L Saltzman, R Morais and S Saltzman are directors R18.391m
Delmas warehouse Eleador (Pty) Ltd 50% owned by Minlou (which is owned by wholesale and distribution executive Chris Williams), 50% owned by Dis-Chem Property Holdings
Cape Town warehouse MDSD No. 3 (Pty) Ltd Adventure Commercial Holdings (Pty) Ltd, of which Ivlyn (Pty) Ltd is a 76% shareholder R18.787m

This new ownership structure differs from that disclosed in the company’s pre-listing statement published in 2016. At that time, the related party interests in the KZN warehouse (via Josneo) and then still to be completed Cape Town warehouse (via MDSD No. 3) were held through Dis-Chem Property Holdings.

Source: Dis-Chem Investor Day 2018

In response to detailed questions from Moneyweb regarding whether the group will pay full rent for its warehouse facilities, given the position it has taken on its stores, Saltzman said: “Dis-Chem Pharmacies is looking for relief on the non-essential part of the business. This applies to all space leased across the group and is a principle pertaining to all leases regardless of the nature of the lease.

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

“The timing of the payments are different but Dis-Chem wants to be treated in the same manner as all other providers of non-essential trade in instances where the non-essential element applies to any of its trade.”

Read: Covid-19: Major mall owners hammered on the JSE

The group would not disclose whether it has made payment of rent for the leases due to related parties. Given the reference to “timing of payments” in Saltzman’s response, it appears that while retail rental is paid upfront, warehouse rental is paid in arrears. The group would also not disclose whether it would be making rent payments to the related parties at month-end.

Moneyweb posed the following questions to Dis-Chem:

  1. What percentage of floor space (the area let) of the warehouse assets to which Dis-Chem pays rent to related parties are used for the storage and distribution of non-essential items?
  2. Are there any warehouse assets (to which Dis-Chem pays rent to related parties) which are only used for essential items?
  3. Has Dis-Chem proposed what it deems a ‘fair’ rental to these companies who are related parties?
  4. How has or will the group negotiate the rental due to related parties, given the nature of these transactions?
  5. Has Dis-Chem proposed what it deems a ‘fair’ rental to any of its landlords?

All Saltzman would say was the following: “Dis-Chem Pharmacies has proposed a mechanism to all landlords as to what is fair and reasonable – this essentially is centred around what is deemed non-essential vs essential. It is weighted towards turnover as opposed to space, again a fairer reflection of essential vs non-essential goods.”

Listen to Nompu Siziba’s interview with Trafalgar MD Andrew Schaefer:



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He is just looking for a gap. Dispicable and immoral.

I agree.

Managing for managers – – – pay yourself first.

Damage being done to shareholders!! Do the honourable thing, Ivan.

WELL DONE MONEYWEB – even the most intricate structure, designed by top brains to hide Ivan’s underhandedness is exposed by MW!! You truly are the ‘investigative journalists’ so urgently required in SA now.

I’ve asked this question in another article:
Did Dis-Chem, or any retailer, ever pay more rent voluntarily when they had a good month?

If they have a problem to pay get a bailout from government.


I will avoid them for now.

There are also pensioners that have Dischem shares via their retirement funds.

Hilton, please ask them whether they paid all their suppliers at end of March exactly on the terms that existed when those suppliers shipped their goods to Dischem.

As to rental strike, times like these show you people’s true colors. I will avoid them in future if I can.

Disposed of my shares when news broke of their ‘secret deals’ with their own companies.

This can (and hopefully will) cause a serious dent in the standing of the CEO and family – not happy with making money on floating the company – they also want to skim more off the top – but in an dishonest way.

When people build companies they get a sense of entitlement. “I built this company” , they then forget that once you are public then its no longer your company.

Once you then start doing dodgy deals and related party transactions , then you should be immediately fired and replaced. You are not acting in the interest of the shareholders.

Luckily I sold my shares in this company years ago but will now source my medicines fro a different pharmacy —Abhorrent behavior in a time when they still make a roaring trade !!!

As far as I know, a lease agreement is a reciprocal contract, with both parties having rights but also obligations. Some critics have said the shopping centres are acting like mafia. I say to them, that being the case, then start acting like the mafia and inform Dischem that if they don’t pay their rent, then the shoppibg centre can’t guarantee their safety…or electricity, for that matter. Mishaps happen, hey.

Everyone is in a tough position.

It’s unfair for anyone to carry the full grunt of this. The knock must be shared between business and their partners.

The clothing companies are getting zero income , zero benefits from their leases , should the landlord then be getting 100% of their income ?? No ways , it’s not the retailers fault (alps not the landlords), but they are in this together.

Dischem however , hmmmm . They are open and probably and although their range might be limited to essential services only , I doubt that they are taking huge knocks. They are selling things now , that never would have sold if it were business as usual.

I would love to see their financials , if they showed any growth in this quarter , and they then try and make even more profit by stealing rent from the landlord , then that’s would be hugely unethical.

The Dis in Dischem is for discount.

Not on goods sold but on rental.

Another company shifting their business risk onto others to maximize profits. Profits for director & shareholder bonuses.

Ill shop at our local privately owned pharmacists and support them rather.

As a shareholder in Dis-Chem I find Saltzman’s attitude towards rental payments exceedingly unethical and is likely to cause more damage to shareholders than he realizes and will certainly hurt the business. The rental arrangements at their various warehouses needs to be investigated thoroughly and if current Dis- Chem directors are involved in the rewards and rental side of these operations then they need to be exposed

I agree

Look at Steinhoff. (perhaps a little harsh comparison), but once private companies go public then there are always agreements and services that were in place before the listing and then take a long time to come to the forefront.

As I understand it, the Directors ARE involved in the rewards . . . . .hence the outrage.

”When they circumcised Herbert Samuel they threw away the wrong bit”

David Lloyd George (1863-19450)

Q: Will Dischem treat all Landlords equally?
A: That will depend on their Demographics!

Dischem have just lost me as a customer.
It is disgusting for them to withhold rent.

They certainly have lost me as a customer,as I own property shares and this will definately effect me.

Just returned from Dis – Chem at Northgate (Jhburg metro) our happy customer focused favorite shop is selling face masks at a few cents short of R 50 each – that is absolute robbery. I urge those people who hold shares to rather not sell but to tackle the company and its directors at the next available AGM and in need vote Ivan, Lynette, and Saul Saltzman off the board

They have been spending huge amounts on advertising to proclaim what great guys they are. Like Amazon bragging how good they are to staff….

Dis-Chem have shown their true colours

Wonder how much the CEO and his family have contributed to the Solidarity fund? Remember this is the same family that did a dodgy private pre placement before listing on the JSE. Pity their dubious actions are not more wildly know.

It takes Covid-19 to demonstrate how fragile the whole financial system is.

Extremely disappointing behavior from this CEO and company. This is a crisis that hurts everyone, don’t just try push your pain onto someone else. Pain needs to be shared by all. Dischem is fortunate that it can trade, and is therefore better off than most business. It shouldn’t take advantage of this situation. The vast majority of tenants will be requesting / demanding some form of help from landlords, I’ll bet their turnover (ie: rental collected) will be much, MUCH worse than the impact on Dischem from lower footfall and reduced sales of non-essentials. The smaller tenants will be the ones that need help the most, not a massive listed entity like this.
Will be switching my shopping to Clicks from now on, at least they are taking honorable decisions (for now).

Moneyweb should forward this article with comments onto Dischem. If they had any compassion at all they should apologise to the public for their behaviour.

Why not pay out “essential” turnover to the respective landlords?

Opportunistic but blind. Well done Hilton with your article.
So, Saltzman says, inter alia, that “Dis-Chem Pharmacies is looking for relief on the non-essential part of the business.” Great – retail space is non-essential (and, by implication, the customers who have to visit such ‘spaces’ are also non-essential; they don’t flippin well go and buy from your dicky warehouses Mr Saltzman, do they!).
Solution: Close all non-essential parts of your business. OR your customers can do that for you by not even entering your ‘non-essential’ spaces.
I agree with above comments re shifting 100% to clicks and others that (for now) are behaving ethically and responsibly and that are showing respect to all stakeholders.

Dischem pay your damn rent. All stocks of goods of all types and all your office equipment and fittings were safely in the stores for the whole month !!!!!
If you want a discount move everything out for a week or two and see what that costs.

Stupid comment .

Retailers are not paying retail rental rates for storage.

The reality is that dischem is pushing the envelope of what is expected from a retailer that is actually open in this time

I sympathize with the retailers that can’t trade at the moment. Not their fault and the landlords can’t charge retail rentals for storage of property.

Thank you for this very enlightening article. I read in business news at weekend that Dischem was probably not going to be paying rents in shopping malls. I have no vested interest in Property owners who are also notoriously unsympathetic to many of their smaller tenants. This made me irritated. Now when I know about the deals with their warehouses I am more than irritated. Clicks, or better still community pharmacies here I come, that’s of course if Discovery will allow me to in respect of prescriptions. I wander if they are paying a full compliment of staff or if the responsibility for them has been shifted to the tax payer. Sadly most customers will not know about this.

Dis-Grace. A time of crisis reveals the true character of all men and women. Some are driven by a desire to serve and help; others are motivated solely by self-interest, grabbing for themselves whatever they can reach.

Good job by an ideal media agency

End of comments.



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