Pharmaceutical retailer Dis-Chem is facing a potential lawsuit that may force it to pay rent in full or lose its leases, says a Business Day report.

Dis-Chem has paid its May rent in its entirety, but property owners intend to still collect the outstanding 50% owed from April. The report says Dis-Chem and property owners have been embroiled in a battle over rental payments for the month of April.

The company was deemed an essential provider and thus able to trade during the lockdown, but could not do so at full capacity.

It argues that because of lower trade figures it shouldn’t be required to pay full rent.

But the position of the property industry is that no relief will be offered to retailers selling essential products in more than 75% of their gross lettable area, and that this makes them liable to pay 100% of their rental and recoveries.

What’s more, the Property Industry Group – an alliance of real estate investment trust owners and owners of shopping centres – says relief and assistance guidelines are not to be applied unilaterally by the retailers at their discretion.

Dis-Chem CEO Ivan Saltzman says the retailer is now in a position to trade its full offering, and has paid its full May rental, as it has communicated to the landlords from the start of its engagements with them.

But the Property Industry Group says: ‘Rent is contractually due on the first of the month and for most of April (Dis-Chem did not pay) anything.’ Only after ‘several calls from various property owners’ did Dis-Chem ‘eventually’ stump up half the April rent and ‘the full amount of (its) utilities and assessment rates recoveries in the middle of the month’, says Property Industry Group CEO Estienne de Klerk.

De Klerk argues that Dis-Chem’s obligations are of a contractual nature, meaning that ‘Dis-Chem will be in breach of all of (its) lease agreements as an essential services retailer’ if it does not pay in full.

Saltzman is clearly digging in for a fight, as he feels that Dis-Chem has been unfairly targeted.

‘Our view is that the landlords are using the media to put social pressure on us. It feels like a cheap shot, considering that they have much bigger challenges on their hands than a correctly applied principle of a 20% reduction for one month.’

Business Day says Saltzman is right that landlords have a bigger fight on their hands. The property industry has asked the government to intervene in the case of big retailers that were not allowed to trade during lockdown. This matter also relates to an impasse regarding rental payment.

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