Ending their tiff with brands over rent waiver during lockdown, mall owners have agreed to offer 50 per cent cut in rent for the lockdown period, lower common area maintenance (CAM) and switch to revenue-share model for three months. One of the country's largest mall operators DLF has assured some of its tenants of offering mutually acceptable terms while convincing them to open up their stores.
Other major mall owners are also working out options that would ensure both the parties sharing part of the revenue loss on account of nationwide shutdown. Among the options on the table are complete waiver of rent for the lockdown period, deferral of the rent for some time or shift to revenue share which would ensure both mall owners and tenants sharing the risk in case of low sales.
Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE said that many mall owners who have less debt may be able to offer concessions as they could have the required leeway but malls that have high level of debt would not be able to offer much.
While some of the malls have supposedly agreed to go for complete waiver of rent for the lockdown period, others have given 50 per cent waiver, said Kumar Rajagopalan, CEO, Retailers Association of India.
Malls being quite capital-intensive, their owners are also under pressure to generate cash for serving the debt. Not surprisingly, many of them have tried to resolve the issues with the tenants quickly so that cash generation can happen. While they have agreed to cut minimum rent they have also shifted to a revenue-share model with many of the tenants. Industry sources said that the minimum revenue share is 5 per cent and maximum 11 per cent but in some cases it could be higher.
The mall owners have renegotiated the terms of rentals with each of the tenants individually. The concession in rent in many cases varies from 15-50 per cent, depending on the tenant's size, for the lockdown period. Many of the restaurant owners have, however, insisted for complete waiver of the rent for the lockdown period and lowering the rent in future as social distancing would substantially reduce their occupancy level.