British Land, one of the UK’s largest commercial landlords, has collected less than half the rent due from retailers on its estate, as tightened coronavirus restrictions force many businesses to close.
The company, which owns the Broadgate estate and a section of Paddington in London, said on Monday it had received just 46 per cent of the rent owed by retailers for the three-month period from December 25.
The latest lockdown measures introduced in England last week have forced non-essential retailers to shut for at least six weeks, heaping more pressure on shopkeepers and their landlords, who have been at loggerheads over who should bear the costs of coronavirus.
One point of contention is a government moratorium on commercial evictions, which means retailers that have fallen into arrears over the course of the pandemic are protected. Ministers have said that the ban will come to an end on March 31, but are facing calls from tenants to extend it in light of the new lockdown measures.
Property owners, having faced rent shortfalls for close to a year, are also under pressure and many face breaching covenants with their lenders as a result.
Melanie Leech, chief executive of landlord body the British Property Federation, said that an extension of the moratorium would stop tenants coming to the negotiating table and do little to ease the building burden of unpaid rent.
The ban, she added, was “only ever intended to provide temporary breathing space for businesses in distress, yet well-capitalised businesses continue to avoid paying rent when ministers have made clear that if you can pay, you should pay”.
Commercial rent is typically paid in advance and covers the three months from the payment date. Overall, retailers in the UK have so far paid 54 per cent of what they owe for the December quarter, according to an analysis of 35,000 commercial leases by property data company Re-Leased.
At the same point a year ago, retailers had paid around three-quarters of the rent that was owed for the December quarter.
“With billions of pounds in missing rent, and further restrictions to navigate, many landlords will be under serious financial pressure, especially those with retail assets in their portfolio,” said Tom Wallace, chief executive of Re-Leased.
Positive vaccine news and the relaxation of coronavirus restrictions in the run-up to Christmas fuelled hope that retailers’ incomes might start to improve, but the latest lockdown measures have stymied any recovery.
Almost three-quarters of British Land’s retail tenants were open in the four weeks before Christmas, but the majority have since been forced to close.
British Land has been selling off shops as it looks to pare back exposure to the struggling retail sector. Since Christmas, the company has completed the sale of retail units worth £19m.
Retail makes up less than a third of British Land’s portfolio, making it relatively well placed to navigate the crisis on the high street, according to John Cahill, an analyst at Stifel. Landlords with greater reliance on income from retailers — such as shopping centre owners Hammerson and Capital & Regional — would come under more pressure, he said.
British Land’s share price has risen more than 20 per cent since November 6 as a result of breakthroughs in the development and supply of coronavirus vaccines. Shares fell 2.3 per cent to 454p on Monday’s announcement and remain 23 per cent down on a year ago.