'If this goes on, I might quit': Mall tenants want rental rebates soon to counter COVID-19 hit
SINGAPORE: Since the outbreak of COVID-19 in Singapore, business has slowed so much for one retailer at Bugis Junction that there were days when only one sale was made.
The slowdown began after Chinese New Year as Singapore started reporting confirmed cases of the novel coronavirus. As the number of infections rose and authorities moved the Disease Outbreak Response System Condition (DORSCON) up a level to Orange on Feb 7, the mall emptied out.
“My only sale on Monday was a regular who came to collect an item,” said the owner who preferred to remain anonymous. “After that, I wait and wait but no more.”
When CNA visited on Wednesday (Mar 4) noon, she was again playing the waiting game.
“See for yourself,” she gestured around her store. “There’s no one.”
Last week, she was told by mall operator, CapitaLand, that part of her security deposit will be used to offset the rent for March. But with no clarity on how long or how bad the virus outbreak would be, the business owner is starting to worry about rental payments for the months after.
Rental rebates would be the “best” lifeline, she told CNA, given how rent accounts for more than half the operating cost. And she hopes this comes sooner rather than later.
“If this goes on, I might quit. I feel like I’m wasting my time and effort.”
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Over at Parkway Parade, another business owner, who declined to be named for fear of landlord backlash, is enduring a 30 to 40 per cent drop in sales. He is similarly hoping for rental cuts to tide through the slowdown but has heard nothing so far from mall operator Lendlease Singapore.
“The Government has set an example with rental waivers for hawker centres and markets. We are definitely hoping for commercial landlords to do the same,” he said.
“During the good times, rent was increased. Now it’s bad, we hope something can be done.”
TENANTS WANT MORE DETAILS
The call for rental rebates among mall tenants has grown over the past weeks as the local retail and food and beverage (F&B) industries feel an increasing strain from COVID-19.
It intensified this week after the Restaurant Association of Singapore (RAS) said on Monday it was “deeply disappointed” with a majority of the landlords for being slow to act.
This comes two weeks after Deputy Prime Minister Heng Swee Keat announced a 15 per cent property tax rebate for landlords of private commercial properties in his Budget statement. The rebate was part of a special S$4 billion package to help businesses affected by COVID-19, and Mr Heng had urged landlords to translate that into lower rents.
Following that, a handful of mall owners announced relief packages that included rental rebates, for their tenants. But RAS said in its statement that many F&B operators had "yet to receive any offers or confirmation” of these rebates, while some tenants received less than what was promised.
Mr Logan Wong, founder of Pure Senses that distributes Yankee Candle in Singapore, said he had not received any formal notices on rental rebates from his seven landlords. Letters that he has received from some landlords have only said that more information will be shared “in due course”.
“(The landlords) are so quick to come out with the press releases but they may not be that quick to work out the details,” he said. “We see it as a lot of hypocrisy.”
Details, such as a “by-when” date for when relief measures will kick in, are important so that businesses can make plans for cash flow and other needs. Across its stores here, revenue has dropped by about S$225,000 for the months of January and February.
“You cannot launch something and then not give us a ‘by-when’ date because the businesses need to plan when your money is coming in so that they know how they can go and borrow or do whatever to fill in their short-term needs,” said Mr Wong.
Katrina Group’s CEO Alan Goh said business conditions remain “erratic” for its 44 outlets across nine F&B brands such as Bali Thai and So Pho. Outlets that are located in tourist-dependent areas have seen revenues drop by 70 per cent, while those in the city and suburban areas fell by 50 and 30 per cent, respectively.
“The impact is right now,” he said. “We are in a dire situation and we need immediate action. If announcements are made only by April or even May, it may be over for some of us.”
Another gripe is that several landlords here have said relief measures will be given to “qualifying tenants”. Tenants told CNA that this has left them wondering if they meet the criteria and if so, how much help would they be given.
Assuming that landlords pass on the full 15 per cent property tax rebate to tenants, Mr Goh reckoned it would only be equivalent to about five days of rental rebates.
This is “grossly inadequate compared to the drop we are seeing”, he explained, adding that this is why landlords have to provide rental rebates that are beyond that.
Mr Wong noted how landlords in Hong Kong have reacted differently thus far: “Without needing to do anything, I’ve already received rebates from 3 out of the 4 landlords that we work with."
The most he has received so far is a 50 per cent rebate in rent for two months.
This issue prompted a comment from Trade and Industry Minister Chan Chun Sing on Tuesday.
Asked about RAS’ statement by Member of Parliament Liang Eng Hwa, Mr Chan said there has been “an entire spectrum of responses” from landlords since Budget 2020 was announced.
He urged them to do their part, adding that it would be “very short sighted” for landlords not to pass on benefits to their tenants.
LANDLORDS SAY HELP IS ON THE WAY
Landlords that CNA reached out to earlier this week said they have announced various relief measures and are prepared to do more depending on how the situation evolves.
CapitaLand, Singapore’s biggest mall operator, said it was in the process of reviewing its portfolio of 3,500 leases and aims to complete this by end-March. By which time, tenants would be informed of their respective relief packages.
For now, it has granted rental rebates of 20 to 30 per cent over two months to more-affected eligible tenants in its downtown malls, among other measures such as allowing March rents to be offset by tenants’ security deposits.
Others like Frasers Property Retail, Lendlease and Perennial Real Estate said they would pass on the property tax rebates to their tenants in ways such as flexible payment schemes.
Perennial, however, raised the point that landlords have no clarity at the moment on whether their properties qualify for the tax rebate and that more of these details will only be given next month.
READ: Restaurant association ‘deeply disappointed’ with landlords for not delivering on rental rebates
Meanwhile, other measures by mall operators such as offering free parking for shoppers and reduced atrium rental rates have also been given the thumbs-down by some tenants that CNA spoke to.
Even with complimentary parking, shoppers have not returned in full force as people still feel uneasy about being in public places, they said.
On their part, mall tenants, be it in retail or F&B, have rolled out aggressive promotional strategies in a bid to woo back customers. But this has been done at the expense of their business margins, said Mr Wong.
HELPING EACH OTHER
Nevertheless, some businesses are taking up the offer of being allowed to operate for shorter hours.
For instance, restaurants under Katrina Group have been doing so to control manpower costs.
At least one has taken a step further to extend a helping hand to fellow troubled retailers.
Mr Wong from Pure Senses has pledged S$50,000 to offer interest-free loans to retailers that have banded together to form an informal support group.
Each loan will be up to S$10,000, with monthly payment only starting in May. While there is “no approval process”, businesses keen on the loan will need to have a minimum paid-up capital of S$20,000 and be locally incorporated with at least 30 per cent Singaporean shareholding.
Asked if he is worried about potential abuses of his initiative, Mr Wong said he is doing this “in good faith”.
“Frankly, those who want to give the S$10,000 must be prepared that they will lose the money – that’s the truth.”
The businessman is also spearheading a “COVID-19 pledge" with four other retail and F&B businesses to offer cash allowances to employees whose income falls below S$2,000 a month. The allowance involves a cash payout of S$30 a month from February to April.
The group will also match the cost of the allowance one to one for companies that are keen to pledge, but unable to fork out the entire amount. So far, Pure Senses and F&B chain Wok Hey have said they will put aside about S$7,500 for this.
“This is the time we band together and try to help each other out,” said Mr Wong.
“I would love to say that the purpose of this loan is to provide immediate short-term liquidity to meet payroll obligations before we receive the credits and rebates from Budget 2020, and before we receive the publicised rent rebates from landlords, if we do receive it,” he added, while calling for other businesses to join him.