Spotlight halts April rent, demands 50pc cut

However, it has not paid rent in April, writing to landlords of its intention to pay only 50 per cent of gross occupancy costs “including but not limited to rent and outgoings” for the months of May, June and July.

Should landlords agree to its new terms and conditions, Spotlight writes that “as a sign of good faith, within four business days of receiving your signed confirmation, we will attend to payment of 50 per cent of the April rent with payments for the months of May, June and July 2020 to occur on the first Friday of each month thereafter”.

The group, which turns over billions in sales each year and owns a huge property portfolio, joins Chemist Warehouse, Priceline, Super Retail Group and Hungry Jacks that have all written to their landlords proposing big rent reductions despite enjoying solid turnover and in some cases, benefiting from the changing retail landscape.

As with the other retailers, Spotlight provides no turnover figures to support its rent relief requests, but says it has suffered government-enforced store network closures in Tasmania, New Zealand, Singapore and Malaysia.

“Not all of Spotlight Group’s retail brands [Spotlight, Anaconda, Harris Scarfe and Mountain Designs] or categories have been impacted equally, however we have one balance sheet and the aggregate fall in revenue caused by store closures and exacerbated by general retail malaise has been nothing less than startling,” wrote Spotlight Group Holdings managing director Avi Gilboa in a letter dated April 21.

Difficult situation

Warren Ebert, managing director of Sentinel Property Group, which has over 500 tenants including Spotlight and Super Retail Group, said landlords understood retailers were in a difficult situation and were “keen to negotiate in good faith”.

“Rents are negotiated in relation to a specific tenancy and the turnover of that store. If retailers want rent relief because they have closed stores in other regions, then all leases should be negotiated based on the group’s profitability,” Mr Ebert said.

He singled out auto-parts retailer Repco as one group that was doing the right thing.

“They were happy to sit down and discuss new rental arrangements that suited both them and landlords,” he said.

In a LinkedIn post, former Queensland premier Campbell Newman, now the chairman of commercial property investment group Arcana Capital, hit out at the “unconscionable conduct” of some ASX-listed retailers which had refused to honour the terms of their lease and pay their rent.

“Many landlords have received ‘take it or leave it’ letters proposing significant rent concessions or outright rent waivers. Landlords are reporting that they have been threatened and pressured to accept,” Mr Newman said.