Retail rent collection plunges to 58% in April

More than 1 in 5 large national chains aren’t paying

National /
May.May 12, 2020 08:00 AM
(Credit: iStock)

(Credit: iStock)

If retail landlords opened a Tenant Hall of Shame right now, they might begin by inducting Supercuts, Barnes & Noble, Red Robin, General Nutrition Centers, Gap, H&M, Foot Locker and Men’s Wearhouse.

Those big names were among the 21 percent of the 135 major chains paying no rent or a small fraction of it in April, according to a new report.

Overall, national retail chains paid 58 percent of billed rent last month, down from 96 percent during the same period last year, data firm Datex Property Solutions found. Gyms, movie theaters and hair salons were among the nonpayers.

The report counts major chains as those that have a minimum gross monthly rent of $250,000 or lease 10 or more locations. It is based on verified collections from Datex’s portfolio of clients that report payment information from thousands of U.S. properties.

Datex clients include major landlords such as Vestar, Weitzman, investment firm Brixton Capital, Devonshire REIT and Lewis Retail Centers.

Grocery stores, banks, pharmacies, pet stores, office, fast-food chains and home goods stores largely made up most of the list of payers.

An earlier Datex report found April rent collection began terribly for commercial landlords.

Datex CEO Mark Sigal noted that some of the retailers who settled up with their landlords by the end of April had started the month with low payments. Examples include cosmetic chain Ulta Beauty and low-cost clothing chain Ross Dress for Less.

“To me, that’s indicative of a tenant who tested a strategy [of non-payment],” said Mark Sigal, Datex’s CEO. “I think what the data show … [is] tenants backed away from that strategy.”

He attributed that to landlords’ harsh reaction to lack of payment from retailers with the ability to pay.

“The tenants that took the ‘we’re not going to pay’ strategy that clearly had the wherewithal, landlords took a very hard line,” said Sigal.

He pointed to one shopping center in Louisville, Tenn., near Knoxville, where a landlord sued six tenants for not paying rent. Two of the tenants, Mattress Firm and kids clothing retailer Carters, made Datex’s list of 135 laggards. By the end of the month, the baby clothing chain paid 0.9 percent of rent nationwide, while the mattress seller paid 26 percent, the report found.

Chains that paid some rent include Applebee’s, Boost Mobile, Five Guys Burgers, GameStop, Massage Envy, Planet Fitness, Sally Beauty Supply and Subway. Those retailers paid landlords less than half of what they paid a year ago.

Sigal said that within Datex’s network, more than a third of tenants are asking for rent relief.

Allstate Insurance paid 87 percent of its collective bill and State Farm paid 82 percent. Both paid 100 percent a year ago.

Sigal noted, however, that April was only the first full month of the pandemic. Some stores plan to reopen or expand their hobbled operations this month while others will stay closed. “May is where I think some of this shakes out,” he said.

Write to Erin Hudson at [email protected]


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