About 90 per cent of stores in Westfield’s centres are now open. Visitation at the end of June 2020 is around 87 per cent of what it was the same time last year, she said.
ASX-listed plus-sized fashion chain City Chic told investors this week it had closed 14 of its holdover stores in cases where it was “unable to reach an agreement” with its landlords on appropriate rents.
The Age and The Sydney Morning Herald understand all of the closed stores were leased with Scentre, which has a market capitalisation of $12 billion.
Big retailers such as Solomon Lew’s Premier Retail and Naomi Milgrom’s Sussan Group are facing down landlords, refusing to pay rent during the coronavirus restrictions and saying upon reopening they will only pay a percentage of gross store sales rather than their prior fixed rent agreements.
While other landlords have been largely amenable to these deals, Scentre has so far refused to agree to those terms, the chief executive claimed. “Because once they do, they’ll be inundated by [those requests],” they said.
About 20 per cent of the 272 retailers listed on Sydney’s Westfield Pitt Street mall are still “temporarily” closed, according to the Scentre-owned mall’s website.
One smaller restaurateur, who didn’t want to be identified, said they had stopped paying rent when their sales fell below $100 a day and were worried about how they would survive if they were forced to pay back the money owed.
“I’ve had great support from all my other landlords but I’m waiting to hear from Westfield,” they said. “It’s going to take us a year to get back to levels we’ve seen in the past. Margins are very thin. If we’re barely making rent, how are we going to be able to pay back the rent owed?”
“We’d be better off cutting our losses,” they said.
Another tenant was more positive. Arj Rupesinghe, chief executive of Mantle Group Hospitality which owns Duck & Rice and Babylon in the Pitt Street mall, said its businesses had reopened and were trading well.
“We’ve been working with Westfield and they’ve been proactive through what’s been a difficult time for everybody,” he said.
Simon Crowe, the founder of the Grill’d restaurant chain, said the group closed 18 of its 140 restaurants around the country during the pandemic. A handful has since opened but 13 stores are still closed.
“In a general sense tying down any landlord to get an agreement is proving to be challenging,” Mr Crowe said. “That is as true for Scentre Group as all the other majors. We are trying to engage with them in good faith but it’s difficult to get a response from some of the majors in a matter that’s critical for our business.”
Scentre said it is working with retailers and their banks on commercial arrangements, “with a particular focus on those small to medium sized retailers who need the most support.”
“Every retailer and centre is different and our objective is to come to a mutually agreeable commercial arrangement. We said right from the start of the pandemic that it would take time to work through these conversations and we would do it with the empathy the community expects,” the spokeswoman said.
Paul Zahra, chief executive of the Australian Retailers Association, said that while some landlords had been accommodating of retailers’ needs, others had been providing little in the way of “genuine relief”, although he did not specifically mention which landlords.
“Landlords need to remember we are in a recession. Playing hardball with tenants during this unprecedented economic period is a lose/lose outcome,” he said. “It’s a false economy for landlords to try to extract rent from retailers that need their cash reserves to survive the COVID winter.”
The former David Jones chief executive said he had heard reports of landlords horse-trading with tenants, offering rent relief or freezes in exchange for longer-term leases.
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.
Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.