Retailers paid only £9m of the £31m rent due on stores on 24 June, which equates to 29% of the total. This time last year its retail tenants paid 92% of the bill.
“Covid-19 has resulted in some customers taking longer to pay their rent and we continue to have supportive and constructive dialogue with our customers,” the company said in a statement.
Even though non-essential retail stores have reopened, the number of shoppers visiting high streets and malls is far lower than normal. In England, for the fortnight since non-essential retail opened on 15 June, Landsec said footfall in its centres was 40% lower than last year. However, Britons who had made the trip were in the mood to shop, spending a fifth more than in 2019.
Landlords are being squeezed as retailers look to shut or reduce rents on underperforming stores. The situation has been made worse by the pandemic, with many stores refusing to pay rent altogether after the government brought in a temporary ban on the eviction of high street businesses in England, Wales and Northern Ireland.
Earlier this week Hammerson, the landlord that owns the Bullring in Birmingham, said only 16% of rent due in May and June arrived, while British Land, which owns the Meadowhall centre in Sheffield, said retailers paid 36% of the rent due.
Last week the shopping centre specialist Intu called in administrators after some debt providers on key sites refused to back a rescue deal. The company employs almost 2,400 people and owns 17 shopping centres across the UK.
However, the picture was not entirely gloomy at Landsec, which raked in 60% of the total £109m rent due, with the majority of its office tenants paying up. The company said it had established an £80m rent relief fund to support tenants worst hit by the crisis and said £9m worth of concessions had been granted so far.
In a sign that Landsec expects a recovery, the company also said it would restart shareholder dividend payments in November, helping to drive shares 1% higher on Friday to 580p.
Helal Miah, an analyst at the Share Centre, said the prospect of a dividend was a surprise, given retail and hospitality firms were under severe pressure and it was likely much of the outstanding rent would have to be written off.
“We take the view that dividends will still take some time to fully recover to pre-crisis levels,” Miah said. “Investors should take a cautious stance on the [property] sector, given that the crisis may force it to change its business model should working from home be here to stay, resulting in tenants needing less office space.”