South African Property Owners Plan Relief for Retail Tenants
South Africa’s property owners will provide relief to retail tenants hardest hit by a nationwide lockdown to curb the spread of Covid-19.
The initiative, which focuses on small-, medium- and micro-sized enterprises, will be rolled out by landlords nationally, the Property Industry Group said in a statement published on the website of the South African Real Estate Investment Trusts Association on Tuesday.
The initiative aims to preserve jobs for retailers, their suppliers and service providers, the group said. To qualify for relief, retail tenants will need to agree not to dismiss staff. All tenants whose accounts were in good standing at the end of February will be assured that there won’t be any evictions for the next two months, while retailers prevented from trading in compliance with the lockdown will be offered some form of assistance from landlords.
The coronavirus pandemic hits a South African retail property sector already battling to let an oversupply of space. Through industry bodies, landlords are in discussions with banks and the Johannesburg Stock Exchange to facilitate the relaxing of debt covenants and regulations in order to soften Covid-19’s economic impact on owners and tenants.
Retailers around the world have asked landlords for leniency during a period where they will generate little or no revenue. Woolworths Holdings Ltd. said it’s in talks about temporary rent reductions. Edcon Holdings Ltd. said it only has enough cash to pay staff salaries and may not be able to re-open its 1,100 clothing stores after the three-week shutdown. The Foschini Group Ltd. said it’s stopping rental payments during the lockdown.
For April and May, retail landlords will offer relief in the form of discounts, where rents will be waived partially or fully, and interest-free deferments that will be recovered over six- to nine-months from July, the Property Industry Group said.
The grouping includes real-estate organizations in South Africa, such as the SA REIT Association, SA Property Owners Association and the SA Council of Shopping Centres. It was formed in March to coordinate the industry’s response to the Covid-19 pandemic and its economic effects.
A 23-member index measuring South Africa’s real estate investment trusts dropped 1.7% by 10:39 a.m. in Johannesburg, extending losses this year to The sector is among the worst performers on the Johannesburg Stock Exchange.
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