More and more landlords are pressuring independent small business retailers to provide information prior to them considering negotiating rent relief.
It appears to be that these landlords are doing everything possible to delay agreeing to any offer.
There appears to be a co-ordinated campaign by landlords to slow access to relief to small business tenants. Here is an example of communication I have seen from a national real estate company sent to all tenants in a small shopping centre.
The landlord is sympathetic to the impacts of COVID-19 and echo the Prime Minister’s comments that Landlord’s and Tenants need to work together during this unprecedented time.
Following the announcement from the Prime Minister and National Cabinet on 7 April 2020, there has been further clarity on the proposed amendments to legislation and the now released Mandatory Code of Conduct.
As stressed by the Prime Minister, tenants are still obligated to honour their leases and its terms throughout this period. The landlord is committed to providing an equitable solution, but we expect tenants to respond in kind.
The landlord is willing to provide support to retailers so all parties can emerge from the current challenging environment. We would recommend that all tenants have the following information prepared, so we can move quickly on any responses and support all retailers in a proportionate and equitable manner.
- • Evidence that the business has made application for the “Job Keeper” assistance and has a turnover of less than $50 million (in which case the mandatory code will apply);
- • A statement of financial position, outlining income, expenses, assets and liabilities (preferably audited or certified by a chartered accountant), as at 31st March 2020;
- • Year to date and recent financial year financial statements for the impacted tenancy
- • FY’19 and year to date FY’20 P&L
- • Balance Sheet;
- • Sales turnover history for 24 months to March 2020 by a Certified Accountant
- • Documented evidence of their application and acceptance for assistance from the ATO, State Govt, Federal Govt. and Franchisor where applicable.
- • Report from an accountant or financial advisor with evidence that the business has experienced a substantial reduction in its ability to pay rent due to the impacts of COVID- 19;
- • Summary of major debt obligations and whether any repayment holiday has been offered by the financier;
- • Other relevant information depending on the nature of the business, for
- instance, evidence of a decline in sales or loss of clients/projects and the consequential anticipated turnover for the current quarter, which shows how circumstances have changed as a result of COVID-19 since 1 March 2020;
- • What arrangements are currently in place for the ongoing operation of the business, such as work from home arrangements and whether staff have been stood down; and
- • Whether the tenant holds business interruption insurance that covers the payment of rent and outgoings and if the circumstances for a claim on that insurance have been triggered.
- • Business Plan looking forward as to actions planned post lockdown and beyond.
We thank you for your understanding during this difficult and unprecedent time.
The code of conduct is clear. Plenty of the information being requested by this real estate agent is not covered by the code. Worse still, plenty of what they are requesting will require small business retailers to spend unnecessarily to provide the information.
Take the supply of turnover data. Most shopping centre retailers provide turnover data monthly. To now ask for certified data, which will cost more, is nonsense. It’s like the landlords say they do not trust the data they have bene receiving for years.
Do shopping centre landlords have a guarantee in the lease of foot traffic and if not why would you sign a lease that doesn’t have it
I think the virus answers your question Eddy. Because of Black Swan events how could anyone guarantee the future
Eddy, people sign on for major centre leases for the dream of the traffic they see. Sometimes it works. other times it does not.
This needs to be brought to the attention of the Federal and state governments because it contravenes both’s legislation. In Victoria it contravenes the Retail Tenancies Act which defines this as Unconscionable Conduct on the part of the Landlord which includes ” the extent to which the landlord unreasonably used information about the turnover of the tenant’s or a previous tenant’s business to negotiate the rent; “.
Ive heard of a number of retailers who have told their landlord that they are not providing their Profit and Loss as it is not required by the code. I believe audited sales figures and confirmation of jobkeeper is enough. Any more information asked from them should trigger mediation.
I’d go further Anthony – sales figures do not need to be audited, unless the monthly sales figures provided over the years were required to be audited.
In most cases that I have seen over the years (especially in the larger Centres) the information required upond demand is an audit of the figures. This is checked against the Monthly Sales the tenant provides.
P&l’s etc are Banking requirements and if the retailer is in real troble the Bank would be on to it. so if Centre Management demand this, unless you are willing to give it to them for the deal, say no you are not authorised to see them.