The commercial property industry has unveiled a R2bn-plus package to assist tenants through SA’s lockdown.
To qualify for the relief benefits, retail tenants will need to undertake not to retrench staff during the relief period. The relief package comes after some national tenants including TFG, Pepkor and KFC owner Yum! Brands told their landlords they had definitive legal opinions which meant they wouldn’t need to pay rent for April, and in some cases beyond this, because of the lockdown.
The property industry group (Pig), which includes a collective of three major representative bodies for real estate in the country, says its relief package will provide industry-wide and nationwide assistance for those retail tenants hardest hit by complying with the government-imposed halt in commercial activity. The three major bodies forming part of the group are the SA real estate investment trust association (SA Reit), SA property owners association (Sapoa) and SA council of shopping centres (Sacsc).
The commercial property sector makes a significant contribution to SA’s society, economy, tax revenue and employment. It is responsible for more than 300,000 jobs directly, as well as indirectly in other sectors including cleaning, hygiene, security and technical services, plus building and construction.
The package assumes that the lockdown doesn’t extend beyond 21-days.
“If this isn’t the case, it is critical for stimulus packages such as those provided by the government, banking sector and solidarity fund to kick-in to weather this storm,” said Estienne de Klerk, spokesperson for the collective and SA Reit chair. De Klerk is also the CEO for Growthpoint Properties, the country’s largest private landlord.
For April and May this year, retail landlords will offer relief in the form of rental discounts where rent will be waived partially or completely. They will also offer interest-free rental deferments where the deferred rental will be recovered over the six to nine months from July 1, 2020 onwards. Rental relief includes basic rent, operating costs and parking rental, but excludes all rates and taxes and utility costs, as well as insurance, which all tenants will be required to pay in full.
The initiative will focus principally on supporting affected small medium and micro enterprises (SMMES), but can also provide help to other retail tenants, De Klerk said. The relief is defined through a table with different offers for different kinds of retailers. Each landlord could use their discretion in the relief and assistance that they give a retailer, but the property industry package stipulates the minimum that qualifying retailers can expect.
“All tenants whose accounts were in good standing (as) at February 29, 2020, can be assured that there will not be any evictions for the next two months,” De Klerk said.
Head of listed property funds at Stanlib, Keillen Ndlovu said he believed the package was reasonable as the property industry had “offered a middle ground”. There was effectively a 50% cut in overall rent, including operating costs and parking.
CEO of listed Reit, Dipula Income Fund, Izak Petersen, applauded the moves by the Pig.
“ The property industry is approaching the matter in good faith, cognisant of the challenges all parties face. We have gone as far as availing our assets for free utilisation for testing,” he said.
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