Property industry association PI Group, which is aimed at providing payment relief for companies, has extended its assistance for retail tenants to small to medium-sized entities operating outside shopping malls.
The PI Group launched an initial guideline for assistance and relief for retail tenants on April 7 2020 and, in response to the extended lockdown, it has now announced new guidelines to offer greater relief to all affected retailers, especially the hardest-hit small, medium and micro-retailers.
PI Group is a collective of the SA Reit Association (SA Reit), SA Property Owners Association (Sapoa) and SA Council of Shopping Centres (SACSC).
SA Reit includes listed landlords with a combined market capitalisation of more than R300bn and is a major dividend payer for pension investors.
“We have extended relief for retailers into June, and are in regular talks with our tenants. We want malls to reopen when they can in line with the government's plan and with the Right health measures in place,” said PI Group spokesperson Estienne de Klerk.
De Klerk is chair of SA Reit as well as the SA CEO of Growthpoint Properties, the country’s largest real estate company with nearly R140bn in assets spread across SA, Australia, the UK, Poland and Romania.
The PI Group 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 for April, May and June 2020, according to de Klerk.
Medium-sized non-essential retailers with annual turnovers above R80m but below R1bn can now get 70% rental discounts for April, a 40% rental deferment for May and a 40% deferment for June.
They can defer the rental recovery period over nine months from July.
Large non-essential retailers with turnovers above R1bn can now get a 70% rental discount for April, paying normal rent for May. Or they can get 60% discount for April and 50% deferment for May.
The retail tenant assistance and relief guidelines exclude office, logistics, warehousing, industrial, health care, hospitality and other tenants.
De Klerk said the PI Group had noted President Cyril Ramaphosa’s appeal in his recent address to the nation for large businesses not to resort to force majeure and stop paying their suppliers and rental commitments as this would have a “domino effect on other businesses dependent on that chain”.
Force majeure is a clause that excuses an entity from fulfilling its contractual obligations in the event of a natural or unavoidable catastrophe.
For the property sector, the value chain includes more than 300,000 jobs directly and indirectly through its service providers such as security, cleaning, hygiene and technical services, and building and construction, according to the PI Group.
As much as 72% of SA’s annual retail sales, totalling R789bn, take place at shopping centres.
“Shopping centres are the nexus of SA’s consumer-driven economy and will be pivotal in SA’s post-lockdown recovery,” the group said.
The PI Group proposed that small and micro retailers be given rental discounts of up to 100% for April, with further substantial rental discounts and interest-free rental deferrals for May and June respectively.
“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 said.
The industry’s assistance and relief guidelines still stipulate that all tenants with accounts in good standing at February 29 could be assured that there will not be any evictions during the lockdown period applicable to them, and they will qualify for some form of assistance from participating landlords.
The PI Group said retailers should 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.
Meanwhile, De Klerk said the PI Group was still in talks with a group of large clothing retailers including Truworths, Pepkor and The Foschini Group, which had initially wanted to stop paying rent all together and then proposed paying 20% of their rent due.
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