After months of skipping out on rental obligations due to the coronavirus pandemic, retailers are getting closer to making their landlords whole.
Over 72 percent of national chain retailers paid their July rent as of mid-July, according to the latest report by Datex Property Solutions. That’s up from 62 percent just a month ago.
“We’re moving into this new normal,” Datex Property Solutions CEO Mark Sigal said. “It’s going to be mushy and uneven. I think landlords and tenants have gotten to the meeting of the mind.”
While most grocery stores and take out establishments have been fulfilling most of their obligations throughout the pandemic, sit-down restaurants and apparel stores have only recently started paying their bills as they were allowed to reopen across the country.
However, in July, the only two chains that paid 100 percent of rent seemingly came out of left field. After not paying any rent for months, Century 21 and Dave & Buster’s made their comeback.
Along with Century 21, other department stores made leaps in payments. J.C. Penney paid nearly 86 percent after making no payments last month and closing several of their stores this month. Stein Mart also paid nearly all of its rent after paying just 10 percent last month.
Claire’s Boutiques paid less than 3 percent of rents in June, but paid almost 85 percent in July, according to Datex. DSW Shoe Warehouse’s landlords saw rent collection increase from 16 percent to 96 percent.
While the majority of the 144 retailers included in the report paid more or the same amount of rent compared to last month, 36 chains saw a five percent or more decrease in rent payments.
Chuck E. Cheese stopped paying rent completely, likely due to its parent company, GNC, filing for bankruptcy last month. Victoria’s Secret similarly dropped from paying approximately 12 percent last month to just 2 percent this month, and Barnes & Noble went from paying 18 percent of rents to paying about 14 percent.
Still, fewer retailers are skipping payments completely. Last month 10 retailers failed to hand over even a dime of rent. This month, only three — Justice, Lane Bryant and Chuck E. Cheese — didn’t do so.
Sigal expects this report to be indicative of the next few months leading up to Q4, when many rent negotiations are set to expire.
“You could see a wave of renegotiations, depending on what the economy is looking like, and I suspect, in getting to that place, you’re going to see tenants work pretty darn hard to maintain the faith with the landlords,” Sigal said.
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 Property Solutions’ 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. However, according to Sigal, this month’s report saw higher charges, meaning the numbers were not artificially inflated by negotiations made between landlords and their tenants.
Contact Sasha Jones at sasha.jones@therealdeal.com