Big chain retailers and restaurants are putting their landlords on notice.
Both U.S. and international chains are informing their landlords that they need to reduce rent or cut payments, Bloomberg reported.
Last week, Mattress Firm, which has about 2,400 stores, initially sent a notice to landlords offering to extend its leases in exchange for a break on rent. But this week the chain sent a second notice walking back its previous offer and informing landlords that due to widespread stores closures it would not be able to pay rent.
Subway sent its landlords a “force majeure” letter last week, The Real Deal was the first to report, noting that it would either be paying reduced or no rent on its 20,000 U.S. locations.
Similarly, Swedish retailer Hennes & Mauritz AB has shuttered about two-thirds of its 5,000 stores globally and has reached out to its landlords to discuss options, according to Bloomberg.
Some landlords are responding to the ongoing closure of storefronts due to the coronavirus pandemic by proactively offering breaks to retail tenants, according to the report. California-based Irvine Company Retail Properties is allowing rent deferrals for 90 days paid back interest-free over 12 months starting in January. And a Detroit developer, Bedrock, is waiving rent and other fees for small retail and restaurant tenants for three months.
For landlords, losing out on rent payments could make it difficult to make their own mortgage payments. Earlier this week, real estate investor Tom Barrack predicted that the commercial mortgage-backed securities market could collapse.
[Bloomberg] — Erin Hudson