Half of deadbeat chains start paying rent again
Collections tick up as stores reopen
As retailers reopen for business, their landlords can take a breath of fresh air. Their tenants are starting to pay rent.
At this time last month, 18 major retail chains had not paid May rent in any of their locations. This month, only nine out of the 127 retailers in a mid-month Datex report were total deadbeats.
H&M made one of the largest increases in rent payments, going from not having paid any rent last month to meeting 90 percent of obligations this month. The increase came after several of its New York City landlords filed lawsuits against the fast-fashion retailer.
That might not have been a coincidence.
“Once the big bazooka of lawsuits come out, that’s a mitigating factor,” Datex CEO Mark Sigal said.
However, other lawsuits have yet to pay off for landlords.
Bed Bath & Beyond’s landlord at its 125th Street location is suing for missed April, May and June payments. In Brooklyn, Old Navy and Levi’s are each being sued for three months’ of missed rent, according to New York court records.
This month, Old Navy paid 10 percent of what it owed and Bed Bath & Beyond paid almost 8 percent, an increase from zero last month, according to the report. It is unknown for which locations the payments were made. Levi’s is not included in the report.
Overall, rent collection from national retailers increased to 62 percent so far this month from 55 percent at the same point last month.
Famous Footwear, Party City and Gap are among the chains that have started to make partial payments.
The increase may be largely attributable to states reopening following coronavirus shutdowns. In most of the country, retail stores are open at partial capacity or for curbside pickup.
New York City, which has been hardest hit by the pandemic, joined those regions June 8 as non-essential retailers were allowed to resume deliveries and curbside or in-store pick-up. Phase two of its restart is penciled in for Monday.
Some stores, like Ross, have fluctuated each month between paying more or less their rent bill.
“Some of the operators had a valid argument, but they’re also being a little opportunistic relative to their balance sheets,” Sigal said. “This is a little bit of chess playing.”
However, the reopening has not assisted all businesses. Weight Watchers plummeted from making 93 percent of payments a month ago to 10 percent. JC Penney, which filed for bankruptcy May 15, also joined the non-payers as last month’s 11 percent became a zero.
Still, Sigal has some hope for major retailers, especially as shoppers have been eager to return where they are allowed to.
“I’m not bearish on this one, although there’s plenty of land mines that you can point to,” Sigal said. “The absence of retail has been a really good reminder for consumers about how important retail is to our way of life.”
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.
The report does not include rent relief negotiated between landlords and tenants. This means that the percentage of retailers paying full rent may seem higher than reality.
Contact Sasha Jones at Sasha.Jones@TheRealDeal.com