Dis-Chem, in a move the Sunday Times says is expected to cause ructions in the already distressed commercial property sector, has embarked on a rental go-slow, according to shopping centre owners – even though it continues to trade as an essential service during the lockdown.

Owners of some of the biggest malls reportedly said the JSE-listed company has in some cases not paid rent to landlords for April, while in others instances has paid only a portion of the rent.

Dis-Chem, however, maintains this is not the case and that it is merely negotiating for lower rentals during the lockdown.

Estienne de Klerk, chair of the SA Reit Association that represents most of the JSE’s property companies, reportedly said: ‘It is our understanding they (Dis-Chem) haven’t paid any of our members.’ He said that as far as he was aware, having spoken to SA Reit members, other tenants operating as essential services, such as grocery retailers, were paying rentals. Dis-Chem CEO Ivan Saltzman said the group was still paying its landlords but ‘negotiating for a lower rental during the lockdown, taking into consideration there are far fewer people frequenting the stores and the difficulty of ramping up deliveries’.

‘I’m negotiating for a fair rent (during the lockdown),’ he said.

Rival pharmaceutical retailer Clicks reportedly told the Sunday Times it was paying its rents in all its outlets.

‘Yes, Clicks is continuing to pay rent on our stores and pharmacies, which continue to trade as they have been classified as providing essential services,’ Clicks’ chief commercial officer, Rachel Wrigglesworth, is quoted as saying.

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Several clothing retailers are collectively offering R220m to landlords to cover their rent during the lockdown.

On Sunday, clothing retail groups, The Foschini Group, Truworths, Mr Price Group, Woolworths and Pepkor said after their discussions with the Property Industry Group, they came up with a counter-proposal, offering to pay R220m instead, notes Fin24.

‘Essentially, we are looking at paying 20% of normal rental that the retailers mentioned would have paid if they were paying the full amount,’ said executive director of the National Clothing Retail Federation of SA, Michael Lawrence.

The newly-formed Property Industry Group made up of the SA REIT Association, SA Property Owners Association and SA Council of Shopping Centres said although its primary focus was to help small businesses, it decided to provide support to large retailers as well in the interest of preserving jobs.

The group proposed between 35% and 100% discount for small retail clients such as restaurants and travel agents and 35% rental discount for non-essential retailers with an annual turnover of more than R80m for April.

It also proposed deferring a portion of all affected retailers' rent for both April and May.

But during discussions with clothing retailers, the Property Industry Group gave a general guideline to pay 20% of their normal rental amount and for utilities they consume during the lockdown, which is how the R220m was arrived at.

Lawrence said while retailers received legal advice and opinions saying that their rentals are not due during lockdown for those who are not operating, the federation wanted to adopt a constructive approach that will benefit both retailers and landlords.

Full Fin24 report