With a $97 billion real estate portfolio, Related Companies faced a reckoning this month.
But after bracing for a major loss of rental income, Related CEO Jeff Blau said “the results have been pretty good so far.”
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In an interview with Andrew Ross Sorkin on CNBC’s “Squawk Box,” Blau said commercial and residential tenants are by and large paying rent this month. Retailers, however, are another story.
Just a few days into April, 88 percent of Related’s residential tenants and 95 percent of its commercial tenants have paid their monthly rent, Blau said. The company’s hotels are closed, and so far only 26 percent of its retail tenants have paid.
The CEO called out tenants who have the resources to pay rent but are not. Those “that have capability, have liquidity, have a strong balance sheet” should pay, Blau said. He pointed to sportswear retailer Adidas, which sent a letter to all its landlords in Germany saying it would not pay rent. Blau said the company was publicly shamed for the move and ultimately paid up.
“I think that’s what we have to be careful of today. This is not an excuse for people to not pay rent,” he said. “They have the capacity. This is society’s issue — everybody’s going to get hurt a little bit.”
Related has a mix of startup companies and restaurants reeling from forced closures. Blau said the company is going to work with tenants who need help “to figure out a payment plan or whatever needs to get done.”
“It’s a whole ecosystem. The people that can pay need to pay,” he said. “Landlords need to help out those that can’t. And then the banks need to help out the landlords that are hurt by people who couldn’t pay the rent.” [CNBC] — Danielle Balbi