RETAIL TENANTS NOT ABLE TO TRADE DURING THE LOCKDOWN PERIOD

The Covid-19 pandemic and current lockdown has created an environment where retailers (especially those who trade in non-essential goods and services and for whom business has effectively ground to a halt) may not be in a position to pay the rentals due by them on a monthly basis. This will add to the pressures already being experienced by retail landlords in the current volatile economy. Unfortunately, even in these early days of lockdown, a number of retail landlords have already received communications from their tenants notifying them that, due to the nationwide lockdown and the restrictions imposed on the sale of non-essential goods and the provision of non-essential services, they will not be able to trade and therefore will not be able to service their rental commitments. Retail landlords also have substantial monthly financial commitments and the non-payment of rental by retail tenants could have catastrophic consequences and possibly even result in the closure of malls and severely impact on retail property businesses.

In an attempt to try and protect this area of the South African economy, to minimise the negative impact on the retail property sector and to ensure business survival and continuity after the national disaster,  the Government has introduced regulations known as the Covid-19 Block Exemption For the Retail Property Sector 2020 (''the Regulations''). These Regulations were promulgated on 24 March 2020, remain in force for as long as the declaration of Covid-19 as a national disaster subsists under the National Disaster Management Act (Act No 57 of 2002) or until withdrawn by the Minister of Trade, Industry and Competition, whichever comes first, and apply to:

• Retail Property Landlords - this includes a number of possible stakeholders who facilitate and let space in the retail property sector and who are defined in the Regulations as  ''businesses that are involved in the supply of rentable space in the retail property sector such as retail shopping centres among others. The categories of landlords may include, among others, real estate investment trust companies, property developers who own or operate retail shopping centres and other intermediaries through whom the letting of rentable space in the retail property sector is facilitated''; and

• South African Retail Tenants - this includes businesses that lease retail property and who are involved in various trades including those relating to clothing, footwear, home textiles, personal care service and restaurants and which are defined as  "a firm which is a retailer of goods or services that leases retail property from a retail property landlord, which is incorporated, established or formed under the laws of the Republic of South Africa and whose place of effective management is the republic of South Africa.''

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Property Town Planning Community Schemes Team - Covid19 Property Update - 8.4.2020 - Tina Halstead Lazelle Paola.docx - 507.8 KB