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* Landlords and tenants work together to defer rent
* Did not consider forfeiture of leases - Landsec
* Intu will lower service charges for tenants
(Adds comments from Landsec and Intu)
By Samantha Machado and Patrick Graham
March 24 (Reuters) - British retail property owners and
tenants are working together to defer rent payments and find
other solutions that allow shops, businesses and landlords to
ride out the coronavirus shutdown.
Home furnishing retailer Dunelm was the latest
major UK retailer to say it was launching talks with its
landlords on rent reductions.
The chain, which also said it was drawing down all of its
available credit to ride out the pain of the UK-wide shutdown,
joins a growing list of companies who say they are seeking lower
rent or who simply will not pay when it comes due.
British property developer Land Securities said it
was working with its customers to prevent any of them failing as
a result of their rent bills.
"Forfeiture of the lease in these circumstances was not an
option we were considering for customers unable to pay the rent
and this approach has now been formalised by the government",
Landsec said.
Restaurant and pub industry body, UK Hospitality, has warned
that the vast majority of businesses will be due to make advance
quarterly payments of rents totalling billions of pounds on
Wednesday.
The British government, scrambling to deal with the economic
fallout from the coronavirus outbreak, said last week that
landlords should not evict commercial tenants who do not pay
their rent due to the crisis.
Burger King boss Alasdair Murdoch, who closed 500 stores on
Tuesday, told the BBC's Today programme he would not be paying
rent this week as he prepares to cover staff wages until
government support begins to flow to the company in late April.
"We're not intending to pay our rent tomorrow," he said.
"Most landlords as well have been reasonable about this.
There are a number of creative solutions as well, we could add
three months onto the end of the lease for those people who are
unable to pay ... at the end of these three months."
A halt in payments, however, also raises the question of
whether landlords will be forced to default on their own debt
commitments.
Even before the government began to shut down British public
life this month, Trafford Centre owner Intu Properties
was flagging doubts over its ability to continue operations in
the face of a collapse of several retail tenants.
However, Intu said it will lower its service charges for
tenants by 22% in the second half of the 2020 financial year,
delivering an 11% reduction for the full year.
Dunelm, for its part, said it was drawing down 175 million
pounds in available credit, cancelling its interim dividend and
reducing executive pay for the next three months, while
expressing confidence it could ride out the crisis without
breaching its own debt commitments.
($1 = 0.8581 pounds)
(Reporting by Yadarisa Shabong; additional reporting by
Tanishaa Nadkar; editing by Amy Caren Daniel, Bernard Orr,
Kirsten Donovan)
