London Landlord’s Rental Slump Shows Lockdown Hitting City Hard
(Bloomberg) -- The U.K.’s latest lockdown measures are hitting central London hard, according to early rent collection data.
Land Securities Group Plc, the U.K.’s second-largest real estate investment trust, received just 29% of the advance quarterly rent due on Christmas day from its retail and restaurant tenants in the capital, according to a statement Tuesday. That compares with 87% of rents collected this time a year earlier.
Retail and hospitality landlords are bracing for more pain after a new national lockdown was enforced last week, further hampering tenants’ ability to pay rent. London was already under renewed restrictions prior to Christmas as most stores were forced to close amid surging coronavirus infections.
“Given Land Securities’ exposure to London retail and food and beverage, which was placed into tier 4, closing non-essential shops was a further headwind,” Jefferies analyst Mike Prew wrote in a note to clients Tuesday, referring to the heightened level of restrictions London saw in December.
The landlord’s retail tenants outside of London didn’t pay much more. It collected 36% of the rent due from regional retail properties within five days of the Christmas day deadline, while 87% of office rents were paid.
Read More: Landsec’s Arduous Rent Intake Points to Slow Recovery
Land Securities’ central London retail tenants owed about 8% of the total rent due across all its properties, according to the statement. The firm said in November that it eventually collected half of the rent due from those tenants in the September quarter.
The company launched an 80 million-pound ($109 million) fund in April to help struggling tenants, of which about 30% has now been allocated. In addition, Land Securities has agreed deals with some tenants to defer rents or switch to monthly payments. In total it has collected 65% of the latest quarterly rent after these adjustments, down from 94% for the equivalent period last year.
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