CapitaLand to further waive rent for SMEs, expects earnings to be hit

CapitaLand Mall Trust has committed a rental relief package of approximately $114 million. ST PHOTO: KUA CHEE SIONG

Property giant CapitaLand said it will further waive and potentially defer rent for certain small and medium-sized enterprise (SME) tenants, although this will have an "adverse impact" on its earnings this year.

This move is in accordance with the Covid-19 (Temporary Measures) (Amendment) Bill, which requires landlords to provide SME tenants with additional rental relief amid the pandemic.

The timing and payment of rebates and any deferrals are dependent on the authorities' assessment of the eligibility of the group's tenants, said CapitaLand on Monday.

Chief financial officer Andrew Lim noted that the fiscal hit from the Bill "remains high", despite assistance to defray operating costs through measures such as the Jobs Support Scheme and other specific measures for Singapore real estate investment trusts.

"The financial strain that the measures mandated by the Act... remains high, and will have an adverse impact on CapitaLand's financial performance this year," he added.

"We therefore maintain our conviction that the impact of the regulatory intervention be applied objectively, transparently and proportionally, as a shared responsibility across all stakeholders, so that the commercial real estate ecosystem can (stay) competitive locally and internationally after the crisis."

Under the new rental relief framework, SMEs that have seen a significant drop in average monthly revenue will receive an additional two months' waiver of base rental for qualifying commercial properties and an additional one month's waiver of base rental for industrial and office properties.

These additional rental waivers will be borne by the landlord and be applied to this month and next month for SMEs in qualifying commercial properties, and last month for SMEs in industrial/office properties if their leases or licences were in force on April 1.

Before the Bill was passed, CapitaLand said it had already provided some level of rental relief and committed to pass on any government property tax rebates and cash grants to eligible tenants.

CapitaLand Mall Trust has committed a rental relief package of about $114 million, which translated into rent waivers in April and last month for almost all its mall tenants, inclusive of the value of property tax rebates.

Additional rental waivers were granted from March 27 to 31 for tenants ordered to close their premises since March 27.

Some tenants were also granted a waiver on their turnover rent and were permitted to use the one-month security deposit to offset their rents in March, said the group.

Ascendas Real Estate Investment Trust - which is under the CapitaLand group - waived rent from April to last month for certain retail and food and beverage (F&B) tenants.

CapitaLand Commercial Trust also extended rental relief to retail, F&B and services tenants whose businesses have been hit, on top of passing down applicable property tax rebates to eligible tenants.

"It is in our interest to see our tenants ride through this with us. We are all in this together because everyone in the ecosystem has been impacted," said Mr Lim.


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A version of this article appeared in the print edition of The Straits Times on June 10, 2020, with the headline CapitaLand to further waive rent for SMEs, expects earnings to be hit. Subscribe