Struggling retailers increased the amount of rent paid to their landlords in September compared with three months earlier but still left property owners waiting to receive more than half of rental payments.
Landsec, the property group behind the Trinity Leeds shopping centre and Bluewater in Kent, said that it had collected only a third of rents from its retail tenants, five working days after they were due, compared with 82% of rental payments from office tenants.
The Covid-19 crisis has taken a toll, with the company saying that a year earlier it had collected 89% of retail rents and almost all (98%) office rents during the same timeframe.
Overall, it received just under two-thirds (62%) of rent due in September from all of its commercial tenants, down from 95% a year earlier.
It was a similar picture at the rival property group British Land, owner of the Meadowhall shopping centre in Sheffield and Drake Circus in Plymouth, which collected 50% of rent from its retail tenants and 91% from office tenants, amounting to 69% of total rents.
The commercial landlord has still only received three-quarters of rent that it was due in June.
Almost half of British Land’s retail assets are out-of-town retail parks, which are usually accessed by car and are generally home to larger and more spacious food and homeware stores, making it easier for customers to avoid contact with other shoppers.
British Land said footfall at retail parks was “outperforming” the wider sector, with visitor numbers reaching 89% of the previous year’s levels in September.
The property firm said shoppers were visiting its parks such as Giltbrook in Nottingham and Mayflower in Basildon to buy specific items, what it calls “mission-based shopping”, or to collect online orders or return unwanted goods.
British Land said that it had completed the sale of £245m of retail property since the start of April.
In a boost for investors, the firm has reinstated its dividend from November, which will now be paid twice-annually instead of quarterly. The company confirmed it had not received any business rates relief from the government during the coronavirus pandemic.
British Land shares rose 5% on Friday, a fact that is “testament to the state the commercial property industry is in”, said Nicholas Hyett, an equity analyst at the stockbroker Hargreaves Lansdown, adding “it’s quite something when being underpaid by 25% is considered a success”.
However, Hyett warned that tenants moving into British Land’s empty shops will be paying significantly lower rent than expected before the pandemic and questioned rent rates for office tenants.
“Just 18% of desks in the group’s London offices are occupied and we seriously question whether current rental rates can be maintained if customers’ staff aren’t using the buildings,” Hyett said.