By Jacqueline Mackenzie and Roxanne Henderson
(Bloomberg) – South Africa’s property owners are planning to provide relief to retail tenants hardest hit by the Covid-19 nationwide lockdown.
The Property Industry Group announced in a statement in the South African Real Estate Investment Trusts Association that this initiative will focus on small, medium and micro-sized enterprises and will be rolled out by landlords nationally.
The initiative aims to preserve jobs for retailers, their suppliers and service providers. Retail tenants, whose accounts were up to date at the end of February will qualify for relief on condition they do not dismiss staff. Retailers who were prevented from trading in compliance with the lockdown will be offered some form of assistance from landlords.
South African retail property sector are already battling to lease space due to the oversupply.
Landlords and industry bodies are in discussions with banks and the Johannesburg Stock Exchange to facilitate the relaxing of debt covenants and regulations in order to soften Covid-19’s economic impact on owners and tenants.
Retailers around the world have asked landlords for leniency during a period where they will generate little or no revenue. Woolworths Holdings Ltd. said it is discussing temporary rent reductions while Edcon said it has just enough cash to pay staff salaries and may not be able to re-open its 1,100 clothing stores after the three-week shutdown. The Foschini Group said it’s stopping rental payments during the lockdown.
For April and May, retail landlords will offer relief by wavering rents partially or fully, or through interest-free deferments that will be recovered over six- to nine-months from July, the Property Industry Group said.
The grouping includes real-estate organisations in South Africa, such as the SA REIT Association, SA Property Owners Association and the SA Council of Shopping Centres. It was formed in March to coordinate the industry’s response to the Covid-19 pandemic and its economic effects.
A 23-member index measuring South Africa’s real estate investment trusts dropped 1.7% by 10:39am in Johannesburg, extending losses this year. The sector is among the worst performers on the Johannesburg Stock Exchange.
