1,000 CapitaLand tenants get rental rebates

Published Thu, Mar 5, 2020 · 09:50 PM

Singapore

SINGAPORE'S largest mall operator CapitaLand has laid down more specifics to its rental rebates for tenants amid pressure from various fronts, including a group of retailers that has banded together to seek more help from landlords.

CapitaLand will be giving rental rebates to some 1,000 of its tenants as a start, while it reviews the rest of its 3,500 leases, a move industry associations urged other landlords to follow.

After reviewing February sales and footfall data, CapitaLand on Wednesday issued letters to tenants at both its urban and suburban malls about their relief packages. Some were informed of a 25 per cent rebate each in April and May, on the fixed components of their one-month gross rent. This is in addition to the release of tenants' one-month security deposit to offset their rent for March.

The move comes after the Restaurant Association of Singapore (RAS) on Monday accused landlords of not delivering on their publicly announced rental rebates for food and beverage (F&B) operators, singling out CapitaLand for promising 50 per cent rental rebates to restaurant tenants, but giving less than that.

In response, CapitaLand said it was "unfortunate" that its relief package - to have included flexible rent payments and a one-time rebate of up to half-a-month on a selected basis - was not comprehended by RAS, despite ongoing engagements between the two.

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In Facebook posts on Thursday afternoon, both the RAS and the Singapore Retailers Association urged other landlords to follow in CapitaLand's footsteps.

Meanwhile, a growing group of over 300 local retailers is uniting to demand that landlords do more to help them cope with plummeting sales amid the virus outbreak. The group, called the Singapore Tenants United for Fairness, is reportedly seeking 50 per cent rebates off three months' rent, a South China Morning Post article said on Thursday.

The Business Times first reported of the informal group which, as of March 4, comprises more than 350 brands operating over 1,350 stores, with more than 12,000 employees.

CGS-CIMB analyst Eing Kar Mei told BT on Thursday: "For CapitaLand Mall Trust (CMT), based on our sensitivity analysis, a half-month rent rebate to 10 per cent of its tenants will only affect our FY20 DPU forecast by 0.7 per cent."

She added that other retail Reits should see lesser impact from rental rebates, given their lower exposure to city malls or Singapore retail malls.

On why the landlords might only be dishing out rebates in the months to come instead of now, she said landlords may still be assessing the situation.

Natalie Ong, research analyst at Phillip Securities Research, noted that there are 3,500 retail and F&B stores in CapitaLand branded malls, with the majority held under CMT - eight in the central region, and seven in the suburbs. The three malls held directly on CapitaLand's balance sheet are Ion Orchard, Jewel Changi (49 per cent stake) and Liang Court (50 per cent stake), she said.

She noted that majority of the rebates will come from CMT-owned malls. "Tenants of central malls are likely more adversely affected than suburban malls, which is necessity spending driven. By my calculations, the cost of the 50 per cent rental rebate (on the fixed component of rent) will come up to S$7.5 million to S$9 million. However, the impact to the CMT will be minimal."

Assuming that the rental rebates would cost CMT some S$9 million, this would reduce CMT's FY20 DPU to 12.28 Singapore cents from 12.51 cents, representing only a 1.8 per cent dip, Ms Ong explained.

READ MORE: Retail Reits have priced in Covid-19 impact, say analysts

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