FT – Landlords threaten leisure businesses with legal action: UK property landlords are threatening legal action against hospitality businesses after many withheld rent to save cash during the lockdown, the Financial Times has reported. Pho, Escape Hunt and Caffe Concerto are among those that have been threatened with action. “We are facing a serious problem here,” Stefano Borjak, director of Caffe Concerto, told the FT. “They are trying to wind up the company, which does £40m turnover per year. The cash flow we have at the moment we need to pay staff.” Caffe Concerto operates 37 sites in the UK but faces a winding-up petition – a court order that forces an insolvent company into compulsory liquidation – from Criterion Capital, owner of its Haymarket site, after it did not pay a £100,000 rent bill. According to letters seen by the Financial Times, both Pho and Escape Hunt have also been threatened with action if they do not pay full rent for the next quarter to Sykes Capital, the landowner of their Reading sites. “We appreciate these are difficult times, however, payment of rent should be one of the highest priority business expenses,” the letter said. Sykes did not respond to a request for comment. Andrew Sell, head of asset management at Criterion Capital said: “The government at no time has said that commercial tenants should receive a rental holiday, yet many, but not all, are choosing to withhold rent. Such action is jeopardising our obligation to meet our commitments to lenders.” Some landlords received less than a third of their expected rent last Wednesday after the government granted tenants a three-month moratorium against eviction for non-payment. “Among all of the noise around withheld payments, all business tenants – including retailers – must understand that the emergency legislation rushed through by the government this week does not mean they can avoid paying any rent at all,” Martin Edwards, property disputes partner at Shakespeare Martineau, told the FT. Intu, the shopping centre landlord, said it had received only 29% of expected rent, even after offering a deferral and cutting service charges. “That rent is payable, that’s legally enforceable,” said Matthew Roberts, Intu’s chief executive. One sector chief executive has written to Intu to say: “Intu is an asset backed business, unlike most of your tenants who operate largely leasehold estates. I am sure you are well aware that a leasehold property is a liability if it is not trading, well in case you hadn’t noticed, no restaurant in the UK is trading at this time and we have no hope of opening within the next two or three months. Yet still you demand rent and service charge and offer absolutely nothing in terms of support for your tenants.”

Hammerson reports 57% of rent collected on an adjusted basis: Landlord Hammerson has reported that, as at the end of 27 March (Q+2 day), it has received 37% of UK rent billed for Q2. It added: “Adjusted for rent deferred, switched to monthly payment, and a nominal proportion waived, we have received 57% of rent due. We anticipate both figures to increase as temporary agreements are implemented and further cash is collected. Two flagship destinations are fully closed, Victoria, Leeds and Highcross, Leicester. The essential stores currently trading constitute around 30 units across the UK portfolio, accounting for c.4% of UK flagship passing rent. Overall, as at the end of last week, we have received 35% of UK flagship rent billed for Q2. On an adjusted basis, we have received 55% of rent currently expected. Q+7 day collections rates for UK flagships destinations averaged 96% during 2019. In line with the approach taken for our UK flagship destinations, all non-essential stores are shut on UK retail parks. To date, 36% of Q2 rent billed has been collected from retail parks, or 62% on an adjusted basis. On our UK Other portfolio, collection rates are higher and we have collected 49% of Q2 rent billed, or 61% on an adjusted basis.”