The New Zealand Council of Retail Property (NZCoRP) has polled its members, which include many of New Zealand’s largest retail property owners, and found that over 75% of their 5000 retail tenants have been offered rental assistance.
NZCoRP Chair Campbell Barbour says that despite a vast majority of landlords in their membership not having contractual obligations to provide rental assistance, property owners have responded in good faith, offering to defer, reduce or manage rental payments over this time.
“As our members work through individual arrangements with their tenants it has been helpful to get a broad picture from our industry as to the progress that is being made.
“Our survey shows that almost all tenants have sought some form of rental assistance directly with their landlord and to date around 75% have been presented with a formal offer of rental assistance, with property managers reporting they were working through remaining negotiations,” says Barbour.
“Less than a quarter of tenants have not been offered any rental assistance and in the majority of these cases these tenants have either traded through Alert Level 4 as essential services or are larger corporate organisations.
“Less than half of all tenants have accepted the offers made by landlords for rental assistance, with many indicating they are waiting to see if the Government will come to the party particularly for smaller to medium sized businesses.
“This situation means more than 50% of tenants have not paid a cent under their lease in April, and early indications show that this is likely to continue into May.
“In general, where rental reductions have been agreed the figure negotiated generally sits at around 50% of monthly rental. This has taken the form of deferrals or abatements or a combination of both. We are also aware that arrangements have included other changes to contracts around matters such as rental reviews and lease term extensions.
“The range of negotiated outcomes goes to highlight how many different circumstances exist across our industry and the difficulties in attempting to apply a one size fits all approach.”
Barbour reinforced that while individual negotiations are confidential between parties, this snapshot provides a broad overview of the proactive progress of the sector.
“We are concerned about any misperception that landlords are not supporting tenants at this time, particularly in the retail sector, this is simply not true. A majority of landlords and tenants are working through this to ensure that both businesses are well placed for recovery”, says Barbour.
“This situation is not of property owners or their tenants making, the Government has decided in the best interests of our nation’s health, to continue to largely prohibit retail trade under Alert Level 3. Property owners should not be expected to carry the can for rent due to the Government’s ongoing call.”