First Covid-19 rent reduction request received

[donna]

Hi Marcus - welcome back after many years Well done on the rent reduction - of course not all landlords have the readies to do this and are relying on the Govt to come through for tenants. NZ is an awesome country which has just increased the benefit by $25 a week and will stump up accomodation allowance on top of the benefit. I believe in USA if you lose your job you only get Gov't support for 3 months and then you're on your own.


Welcome to PropertyTalk, curium - most supermarkets have deals with not-for-profits such as Kaibosh, who collect used by date food from various sources and redistribute it to charities - just like foodbanks. I was due to start as a volunteer in a new Kaibosh op. in Kapiti just as the lockdown kicked in.

cheers,

Donna

[ronniegal]

Yep. A global tenant has asked for 100% abatement for rent and OPEX for one month and partial payment for the following months depending on their turnover. We initially proposed 50% reduction in rent and OPEX for two months, after they approached us, thinking that was fair but now they have come back with this. We only have a couple of commercial buildings so this is pretty tough. How's everyone else dealing with the big corporates? It seems it's a one way street as far as the government is concerned.

[Beano]

Yep. A global tenant has asked for 100% abatement for rent and OPEX for one month and partial payment for the following months depending on their turnover. We initially proposed 50% reduction in rent and OPEX for two months, after they approached us, thinking that was fair but now they have come back with this. We only have a couple of commercial buildings so this is pretty tough. How's everyone else dealing with the big corporates? It seems it's a one way street as far as the government is concerned.

Office ?
Retail ?
Warehouse?

[learner]

Hello Ronniegal

I have a mixture of retails, offices and warehouses, and all my tenants (except for two) will be entering their second month of paying no rent, but they will be paying 50% of all outgoings. I offered this to them at the beginning of Alert Level 4, and they all accepted this offer. I intend to continue this into June, as I feel that they, especially the retailers, will need a bit of time to adjust to the new trading conditions. After June, I will play it by ear, as it means they will have not paid rent for 3 months.

The two which have not had a full rent rebate are actually international companies; one asked for a rent reduction (which surprised me, as it's a very large company) and I offered a 50% reduction in both rent and outgoings, which they accepted. The other has not communicated with me al all, and has continued its regular payments, so I've not mentioned anything to them.

During the Epidemic Response Committee hearing this week, the owner of an Auckland mall said that they had $500,000 of monthly expenses, while their 115 tenants have had OPEX and rent reductions given to them. She said the government should also do something to help landlords. She said being compassionate, as Jacinda Ardern has asked landlords to be, does not pay for her expenses. Five weeks ago, Grant Robertson said that a statement on assistance to tenants and landlords would be made in a few days..........still waiting.

Ronniegal, I suggest you discuss with your tenant that you also have expenses to pay, and that your offer of 50% rent and outgoings is fair. Are you on the ADLS 2012 lease? This lease, in Clause 27.5 says a "fair proportion" of abatement, and 100% abatement of rent and OPEX is not fair.

I keep in touch with most of the local tenants, and I find when you have regular contact with them, that it is easier to sort things out amicably.

[ronniegal]

Office ?
Retail ?
Warehouse?

Thanks Beano. It's retail.

[ronniegal]

Hello Ronniegal

I have a mixture of retails, offices and warehouses, and all my tenants (except for two) will be entering their second month of paying no rent, but they will be paying 50% of all outgoings. I offered this to them at the beginning of Alert Level 4, and they all accepted this offer. I intend to continue this into June, as I feel that they, especially the retailers, will need a bit of time to adjust to the new trading conditions. After June, I will play it by ear, as it means they will have not paid rent for 3 months.

The two which have not had a full rent rebate are actually international companies; one asked for a rent reduction (which surprised me, as it's a very large company) and I offered a 50% reduction in both rent and outgoings, which they accepted. The other has not communicated with me al all, and has continued its regular payments, so I've not mentioned anything to them.

During the Epidemic Response Committee hearing this week, the owner of an Auckland mall said that they had $500,000 of monthly expenses, while their 115 tenants have had OPEX and rent reductions given to them. She said the government should also do something to help landlords. She said being compassionate, as Jacinda Ardern has asked landlords to be, does not pay for her expenses. Five weeks ago, Grant Robertson said that a statement on assistance to tenants and landlords would be made in a few days..........still waiting.

Ronniegal, I suggest you discuss with your tenant that you also have expenses to pay, and that your offer of 50% rent and outgoings is fair. Are you on the ADLS 2012 lease? This lease, in Clause 27.5 says a "fair proportion" of abatement, and 100% abatement of rent and OPEX is not fair.

I keep in touch with most of the local tenants, and I find when you have regular contact with them, that it is easier to sort things out amicably.

Thanks Learner. The company in question is international and I clearly made it clear from the start that we have expenses to pay etc and that we thought our offer was fair. The rent they are paying would be on the lower end of the scale given the building is not in one of the larger cities, and yet still they are "politely" asking for an abatement. We as landlords are expected to be "compassionate" and it all appears very one sided. I saw yesterday that Jacinda is alluding to an imminent directive on commercial rent but they said that a few weeks ago.

And yes the lease has that clause.

Very frustrating.

[Perry]

Ronniegal

Do you have the option that is being used by the banks?

I.e. Relief in some measure, now; catch-up on that relief, later.

[Bluecoat]

Try and be nice to some people and they respond by trying to screw you. Probably Labor voters!
Perhaps go back with $50pw reduction, existing TA applies and periodic tenancy. You can negotiate too.

They didn't go ahead and decided to move after lockdown.- signed up with new agency.

I advised at the time that the current TA still applies and they need to give me 3 weeks notice .
Today they advised they are

vacating the house tomorrow- as " our new landlord has requested us to move in on Friday the 1st of May"

Seems the new agency advised them of the new tenancy but failed to look after their client.

[ronniegal]

Ronniegal

Do you have the option that is being used by the banks?

I.e. Relief in some measure, now; catch-up on that relief, later.

Thanks Perry. I'm assuming you mean deferral. We were considering going back to them with 100% abatement for April and deferral over the remainder of the lease for rent and outgoings due from May.

It would indeed be helpful having some directive from the government.

[Keys]

Thanks Beano. It's retail.

No rent at all? Surely, the secure storage of their goods must count for something?

[ronniegal]

No rent at all? Surely, the secure storage of their goods must count for something?

You would think wouldn't you?

[Beano]

Thanks Beano. It's retail.

Retail has been hit the hardest

[Perry]

No rent at all? Surely, the secure storage of their goods must count for something?

You would think so, wouldn't you?

Maybe offering a lease break would do the trick? Please p*** o** and take all your stuff by xxx date and then you can stop paying the lease payts.

[ronniegal]

Yes Beano but we would prefer to bend over backwards for our other local small retail tenants who didn't ask for any reduction and were very grateful when we offered them one, to this large international tenant who expects it all to be one sided.

[ronniegal]

Thanks for your suggestion Keys 😉 but we are cognisant that these are not times to be heavy handed. Our government needs to come to the party with direction.