Covid-19 disruption: Tenants continue to grapple with mall rental agreements3 min read . Updated: 10 Jun 2020, 04:15 PM IST
- Retailers are seeking complete rental waiver for April and May and a revenue sharing or reduction in minimum guarantee agreement on rent
Malls may have opened their doors to customers across the country, but many stores on their premises remain shut as developers spar with retailers on rental agreements. With the 70-day lockdown having dealt a body blow to retailers who saw their businesses collapse, they have been asking mall developers to waive off rent for April and May as well as ink revenue share deals, going forward.
Alisha Malik, vice president, e-commerce at Metro Brands Ltd, that has 500 stores for footwear brands Metro, Mochi and Crocs, said she has opened 250 of her 500 stores in high streets. "The remaining 250 are in malls and we are still negotiating deals before we open them. We’ve asked developers to move to a revenue share agreement which is linked to sales. We cannot go forward on the pre-existing agreements," she said.
Fast food chain Taco Bell, which has most of its outlets in malls in Delhi-NCR, Bengaluru, Cochin, Kolkata and Mumbai, is yet to open its restaurants. "In the light of this new normal, we have reached out to all our landlords across malls…and as and when we are able to reach a mutually beneficial solution, we will open our doors to our customers," said Rahul Sharma, assistant vice president - Business Development & Licensing, Burman Hospitality Pvt Ltd, the master franchise partner for Taco Bell in India. He did not specify the details of his demands from malls.
Fine-dining restaurants are equally stressed.
Curbs on operating hours, restricted seating, no permission to serve alcohol, and pre-covid rentals will force many of them to fold up, said Zorawar Kalra, founder, Massive Restaurants, that runs upmarket eateries such as Farzi Café and Pa Pa Ya said. "We are all waiting for amicable resolutions," he said, adding that it’s too early to say if he will pull out of malls if their demands are not met.
Inorbit Malls, which has reopened properties in Hyderabad, Baroda and Bengaluru, however, saw nearly 90% of mall space and 75-80% of retail brands opening stores since Monday. Rajneesh Mahajan, chief executive, Inorbit Malls said they have offered support to most retailers on an equitable basis and discussions are on with others.
Inorbit Malls is looking to share minimum guaranteed rent for around five months starting April. "The good thing is most retailers are not holding back on opening up stores even if discussions are still going on," Mahajan said.
Blackstone Group Lp-owned Nexus Mall has reopened three of its properties in Chandigarh, Ahmedabad and Amritsar, while those in Mumbai, Pune, Indore and Bhubaneshwar remain shuttered. "Around 70% retailers opened shop and some more are expected to open. Discussions over rent agreements are ongoing. It’s a tricky situation because every rental agreement can be different and individual discussions with retailers are happening," said a person, familiar with the development.
As mentioned earlier, retailers are seeking complete rental waiver for April and May and a revenue sharing or reduction in minimum guarantee agreement on rent. However, two mall developers said it’s not an easy proposal to accept given that there is no clarity on when business will fully pick up.
Real estate firm Brigade Group has opened up two of its Orion Mall properties in Bengaluru, and retailers are gradually opening up stores, while discussions continue with between the developer and brands.
A large apparel retailer—that has a strong portfolio of brands across the country's top malls—said the company has proceeded to open its stores this week, after several developers agreed to reduced rentals over the next few months. “In general, all malls are offering 50% rent from April to September, with a few extending it till December," said a top executive at the company declining to be named.
Meanwhile, American premium athletic wear brand Under Armour that has 10 franchise stores in India said its mall partners are sharing the burden “We have been fortunate and will be opening our stores in DLF Malls in Delhi-NCR this week," said Tushar Goculdas, managing director, Under Armour India
Amitabh Taneja, chairman, Shopping Centres Association of India (SCAI) said that the pandemic has hit the business economics of malls as well as retailers. "This is the time to work together to bring business back on track. Retailers and malls will need to coexist and we are positive that both sides will work amicably to find a solution," he said.