SCCA says it has urged members to show “empathy”

The Shopping Centre Council of Australia (SCCA) has expressed disappointment and frustration that some of its members have not shown the “empathy” requested during the coronavirus crisis.

The SCCA says it has urged commercial and retail landlords not to terminate business leases for the non-payment of rent during the COVID-19 outbreak.

But some shopping centre owners have not followed the council’s recommendation, which is to “engage with the empathy that is required during these trying times”, according to SCCA chair Peter Allen.

“This is surprising, and if correct, very disappointing and frustrating to hear,” he said.

Allen acknowledged that landlords have a role to play in helping retailers, especially small and medium-sized businesses, get through the current crisis, and said the SCCA is working with the Federal Government on a range of measures.

According to reports, the Morrison government is currently considering putting a “freeze” on retail overheads, including rent, to help businesses ­stay afloat.

Inside Retail understands a rent “freeze” is not likely, but some form of support for domestic and commercial rents is under discussion. I

The SCCA has been contacted and asked if its members have agreed to the no lease terminations agreement. But as of the writing of this article, Inside Retail has not yet received a reply.


1 comment

  1. Stephen Spring posted on March 27, 2020

    The Shopping Centre Council has asked its members not to terminate leases for small to medium sized business for non-payment of rent. This will probably become industry practise (s78 NSW RLA) if there was indeed a landlord brave enough to terminate a lease in these times. Currently, the COVID-19 Legislation Amendment (Emergnecy Measures) Act 2020 does NOT mean rent debts won’t accumulate and be expected to be paid under the contract, but there might be some incentives for landlords on rent abatements in the pipeline. If that’s the case then, the tax payer has underwritten the risk of the shopping centres.The other option is a rent freeze. A few the elephants in the room: - -With on going shop lease rents and outgoings payments, employees being terminated and suppliers due with no cash coming in, a massive chunk of Australia’s retailers are now insolvent. This cohort includes many franchises operating in shopping centres. It will be interesting to see if landlords and franchisers under head leases accept a repudiation of occupancy contracts or trigger insolvency event clauses prior to dealing with the crises (to get their legal position right, just in case?); -Despite the increased use of electronic banking, many smaller mum and dad retailers (including thousands of franchisees) and numerous coffee bars and cafés over the years have survived only by tapping into the cash economy. Once they pay their rental overheads and other bills, there’s nothing left, so they pay themselves out of the undeclared cash takings. Can’t see that being good in these troubled times. Don’t expect those to want to reopen facing massively reduced sales and an accumulated rent debt (if that occurs); -Some retailers do not declare all sales to landlords as many landlords use increasing sales figures to "justify" large rent increases. This crises will make rent negotiations or re-negotiations “interesting” in some cases; -The reality is that now many brand chains are rapidly disappearing and refusing to (or can’t) pay rent and the emergency measures that help the mum and dad retailers won’t help long term. Will there be mass repudiations? The other shops that are parasitic upon these name brands will have a resistance to re-open without some kinds of universal retail relaunch; -We all know that real retail rents vs face rents are an illusion. Especially in light of the recent decision of Justice Darke of the NSW Supreme Court in Haxglow v Mirvac. It will be interesting to see what happens when these real rents translate to true current market rents and impact on cap values. Whilst this crisis started out as a community health crisis, it’s probably going to reveal an entire industry’s soft under belly. Empathy? Really?

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