Esther Fung
speaker
145 appearances
3 recordings
1 series
first heard Nov 2017
last heard Nov 2020
Esther Fung’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Landlords Offer Concessions to Keep Retail Tenants Afloat · 25 Aug 2020
podcast
And so they realized that this could also happen in other parts of the country.
It wouldn't come as much as a shock as previously, though.
When the first mandated shutdown happened in March, it really caught lots of them flat footed.
And it really caused them to scramble when it came to asking tenants for payment.
But this time, they realized that, hey, you know, we are better prepared right now.
And here's what we're going to do to the leases.
Some landlords, they are very aware that they don't want empty storefronts, they don't want empty shopping centres, and what they've been trying to do is to make sure that their tenants can survive even if there is another mandated shutdown.
Many landlords have said that they are especially helpful to the smaller businesses who don't have as much access to the capital markets as the larger national retailers.
One of the things that they have offered in terms of concessions would be to give them more flexible terms in their leases, including percentage rent, where a tenant, instead of a high base rent, the tenant would pay 7% of their sales revenue from that store.
This helps the tenant during periods when sales are down.
Other ways the landlords can help tenants is to offer them higher tenant improvement allowances.
These are allowances that help the tenants spruce up their current stores, perhaps some money to put some tables and chairs and tents outside so that they could still have customers come through.
And of course, some would definitely want to include pandemic language in their leases in case another shutdown happens.
These tenants would be able to defer rents during the periods of shutdowns.
But typically, they'll have to pay something.
The landlords still want to get paid something so that the landlords can pay their own overheads as well as their mortgages.
The words pandemic or virus don't typically show up in leases.
Tenants, whenever they sign a lease, they always have to get business insurance.
And usually these policies include like acts of God, like say a hurricane happens or maybe a fire happens and the premises get physically damaged.
That's when the insurance would kick in and the tenants would still be able to make whole and then they can still pay rent.
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