One of Britain’s biggest landlords, with a significant holding at Brighton Marina, has reported struggling to collect commercial rents.
Land Securities said that rent payments had slumped in the final quarter of 2020, with shops and food and drink outlets facing the most difficulty.
Landsec told the London Stock Exchange this morning (Tuesday 12 January) that just 5 per cent of “regional retail” rents were paid on time last month.
The figure for rents received rose to 36 per cent within five days of the quarterly payment date – on Friday 25 December – down from 90 per cent a year earlier.
As a result, dozens of businesses collectively owe Land Securities tens of millions of pounds, with the proportion of tenants failing to meet their rent payments rising significantly at Christmas.
The company said that its figures excluded business receiving concessions and premises occupied by businesses that had negotiated monthly or deferred payment, had already gone bust or had temporary protection from their creditors.
Land Securities reported the rent struggles because of the worsening impact of the coronavirus pandemic on its own financial performance.
Landsec said: “We continue to take a proactive approach to addressing the challenges the pandemic presents to our people, our customers and our business.
“In early April 2020, we established a customer support fund of £80 million for occupiers who most need our help to survive. To date, £24 million of rent concessions have been allocated to customers.”
The company added: “We own and manage some of the most successful and memorable real estate in the UK.”
Yesterday Landsec’s main rival British Land reported a similarly gloomy picture. The company, which owns the Virgin Active gym, in Falmer, said that it had collected less than half of the latest rents due from retail premises within seven days of the due date.
The lockdown in the autumn and the coronavirus restrictions affecting shops during the build up to Christmas – usually the busiest time of the year – had had a huge financial impact.
The figures are likely to prompt concern among councillors and officials because Brighton and Hove City Council has an extensive commercial property portfolio.
The council has more than 550 commercial buildings, with more than 1,000 tenants.
The budget papers for the current financial year said: “The council has a portfolio of commercial property assets valued at £279.9 million generating an annual income of £11.3 million.”
But last month a report to the council’s Policy and Resources Committee said: “The council’s commercial property portfolio, which provides substantial rental income of over £9 million, is known to be highly geared toward the retail sector, which had been declining prior to the pandemic and may now be further impacted in the medium term, particularly as government rate relief support falls away. This could put pressure on commercial rent incomes in future.”
The council’s commercial property portfolio brings in capital receipts of about £6 million a year.
The council’s “covid recovery and renewal programme” is expected to look at “making best use of the council’s operational and commercial property portfolios, with a focus upon delivering sites for affordable housing and supporting community wealth”.
The rising vacancy rate will also reduce the income that the council receives from business rates, worth about £60 million a year to the council, with a further £60 million going to the government.
The council’s “collection fund” arrears from business rates and council tax combined were reported last month to total more than £11.8 million although the government is expected to meet 75 per cent of the shortfall. Business rates arrears alone accounted for about £3.5 million of the total so far.
For many many years property giants have made vast profits from the backs of small businesses. Now is the time to give back instead of stashing money in offshore accounts to prop up the extravagant lifestyles of people who think that Waitrose and Dortmund are mainstream.
Now is the time to demonstrate true understanding of the economic crisis this country faces.