Several clothing retailers are collectively offering R220 million to landlords to cover their rent during the coronavirus (Covid-19) lockdown.
On Sunday, clothing retail groups, The Foschini Group, Truworths, Mr Price Group, Woolworths and Pepkor said after their discussions with the Property Industry Group, they came up with a counter proposal, offering to pay R220 million instead.
“Essentially, we are looking at paying 20% of normal rental that the retailers mentioned would have paid if they were paying the full amount,” said executive director of The National Clothing Retail Federation of SA, Michael Lawrence.
Clothing and other retailers who are not providing essential services are not allowed to trade during South Africa’s five-week long lockdown.
With their shops closed this long, landlords came out last week to offer an industry-wide relief package for retail tenants that are hardest hit by the suspension of trade.
The newly formed Property Industry Group made up of the SA REIT Association (SA REIT), SA Property Owners Association (SAPOA) and SA Council of Shopping Centres (SACSC) said although its primary focus was to help small businesses, it decided to provide support to large retailers as well in the interest of preserving jobs. The group proposed between 35% and 100% discount for small retail clients such as restaurants and travel agents and 35% rental discount for non-essential retailers with an annual turnover of more than R80 million for April 2020. It also proposed deferring a portion of all affected retailers’ rent for both April and May.
But during discussions with clothing retailers, the Property Industry Group gave a general guideline to pay 20% of their normal rental amount and for utilities they consume during the lockdown, which is how the R220 was arrived at.
Lawrence said while retailers received legal advice and opinions saying that their rentals are not due during lockdown for those who are not operating, the federation wanted to adopt a constructive approach that will benefit both retailers and landlords.
“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,” he said.
He said cooperation was necessary because the landlords also face their own economic pressures during the lockdown.
Other retailers, including Yum! Brands, which owns KFC have decided to withhold rental due for some of their outlets.