As Lockdown Eases, U.K. Mall Landlords Collect Even Less Rent

The amount of rent collected by some of Britain’s biggest mall landlords has slipped further despite an easing of lockdown rules.

Hammerson Plc received just 16% of the rent due on its U.K. properties for the third quarter which fell due last week, according to a statement Wednesday. That’s less than half the amount it had rounded up at the comparative week three months earlier, shortly after most stores were forced to close.

British Land Co. said Wednesday it had collected 36% of the rent due on its retail properties. The same tenants paid 43% of the rent due in March.

Mall and store landlords were already grappling with falling rents and values before the coronavirus struck and plunged the sector further into crisis. The government has temporarily limited landlords’ ability to evict tenants and force payments in response to the crisis, meaning some retailers are withholding rent despite remaining well capitalized.

Intu Properties Plc, the country’s largest retail landlord, collapsed into administration Friday after its lenders failed to reach a deal that would have kept the company on life support.

While the initial figures are lower than the previous quarter, more retailers are now paying rents monthly, meaning the numbers should rise throughout the quarter. Hammerson went on to collect 73% of the rent it was owed in the first half of the year. The company has also negotiated an amendment to the terms of some existing loan notes that gives it more breathing space, according to Wednesday’s statement.

While rent collection has deteriorated significantly “this is due to the combination of business closures during lockdown, and the government’s blanket policy of stopping all landlords from evicting tenants,” Stifel analyst John Cahill wrote in a note to clients Wednesday. “While no one wants to see the latter happen, it has removed the incentive for tenants to pay, and therefore it is no surprise that rent collection rates have tumbled.”

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