While mom-and-pop retailers may be feeling the economic pain of coronavirus the hardest, some bigger companies have decided to forgo rent payments as well. But landlords aren’t buying it.
Owners of malls and shopping centers have been putting together a “blacklist” of financially stable tenants that haven’t met their April rent obligations, the Wall Street Journal reported.
“We think that it’s their duty to pay April rent,” chief executive officer of Kimco Realty CEO Conor Flynn told the Journal. “The customer base is going to recognize who the bad actors are.”
According to Marcus & Millichap, April rent collection has ranged from just 10 to 25 percent for mall owners with higher concentrations of nonessential tenants, to 50 to 60 percent for landlords with “essential” tenants such as grocery stores and pharmacies.
Large retail tenants that have failed to pay rent in full include Burlington Stores, Petco Animal Supplies, LVMH Moët Hennessy Louis Vuitton, Victoria’s Secret and Staples.
Staples, which has been able to keep many stores open in areas where it is considered essential, has told landlords that it will not pay rent because of a drop in sales. Dick’s will not pay rent at stores that were closed due to government orders, but will continue to pay rent for stores that it closed voluntarily.
While some mall owners have indicated that they plan to declare non-paying tenants in default, smaller landlords may be more hesitant to confront big tenants over rent payments. Retailers appear to recognize that they have the upper hand, but things could get messy.
“The retailers think they have leverage here and they’re trying to use it,” Green Street Advisors analyst Vince Tibone said. “I see it potentially becoming a fight and going into litigation.”
Source: The Real Deal