Rental relief measures to help tenants whose businesses have been hit by the pandemic seem to be falling short, with some tenants saying the rental rebates are not enough, while some landlords are still demanding rental payments from tenants that have been forced to stop operating.
New legislation was passed last month to ensure that commercial property owners unconditionally pass on property tax rebates in full to their tenants. But many tenants say the rebates are insufficient, given the circuit breaker has been extended to June 1, in what is already a dire economic environment.
A growing number of tenants are now planning to file for a temporary suspension of their contractual obligations.
SG Tenants United for Fairness said about 5 per cent of the informal group's 600 retailers have filed for such a suspension of their contractual obligations, and a further 40 per cent are planning to do so this month if they do not get more assistance from their landlords.
The law, passed in early April, covers contracts in which the obligations have to be performed on or after Feb 1, but excludes those entered into on or after March 25.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, believes tenants need rent support for at least four to five months, and landlords may have to consider lowering rents for the second half of the year.
He noted that some landlords, including City Developments and Far East Organization, have stepped up efforts to help their tenants, but most others are still dragging their feet despite their tenants' plight.
"The feedback we are getting is some tenants are unable to pay rent because they have no cash flow. Under the Covid-19 (Temporary Measures) Act, landlords cannot evict or commence legal action or seize assets of tenants who can't pay rent. But it doesn't preclude landlords from sending them notices of outstanding rents," Mr Wee said.
Take Mr Haden Hee, owner of Hanguk Kitchen, a Korean food products wholesaler. None of the his firm's clients, including Marina Bay Sands, is making orders and the business at 2 Senoko South Road is now shut.
To add to his concerns, he has about $400,000 of food imports he fears may not sell quickly, even after the circuit breaker ends, as much of it is perishable, including 15 tonnes of kimchi that arrived on April 14 from Busan, which will not keep beyond one to two months.
But the industrial tenant is still getting demands for rent from his landlord. "This is a big problem for food suppliers," he said.
"I don't understand why we are getting only a 30 per cent rebate. Our business started dropping sharply in February and we have been burning through our cash reserves. If the landlord isn't willing to help with May's rent, most of my 40 workers will have to go on no-pay leave. For the sake of the economy, I hope the landlord will quickly reach a settlement with us."
His landlord said in an April 16 e-mail seen by The Straits Times that it would "proceed with other recovery actions" if over $45,000 in defaulted rent is not paid by April 22.
BURNING THROUGH RESERVES
I don't understand why we are getting only a 30 per cent rebate. Our business started dropping sharply in February and we have been burning through our cash reserves. If the landlord isn't willing to help with May's rent, most of my 40 workers will have to go on no-pay leave. For the sake of the economy, I hope the landlord will quickly reach a settlement with us.
MR HADEN HEE, owner of Hanguk Kitchen, a Korean food products wholesaler whose business is now shut. He is still getting demands for rent from his landlord.
Ascendas Reit told ST yesterday that its food factory tenants have been given "0.6 month of rental assistance", including the property tax rebate.
A spokesman said: "Our team has proactively engaged (Hanguk Kitchen) to offer our help. In the past month, we have reached out to the tenant numerous times to seek an amicable solution.
"In our most recent communication with the tenant, we have extended the payment terms and offered additional assistance."
Another industrial tenant, Marlin Divers, also has not received relief from its landlord yet. The diving course instructor is among several tenants at 115A Commonwealth Drive who signed a petition on March 25 for rent relief.
Owners Martin Benedict and his wife Pow E Lin said: "We stopped doing overseas dive trips in March because of the outbreak. Then, our income stopped when the circuit breaker started on April 7. It is too long for a small business like ours to wait for a 30 per cent rebate, given the drastic drop in business."
A Mapletree Industrial Trust (MIT) spokesman said that in addition to the 30 per cent rebate, industrial tenants at 115A Commonwealth Drive will also be eligible for an additional rental rebate of up to 0.5 month of net rent under its Covid-19 assistance programme.
"For example, if their gross revenue in April is 30 per cent lower than March, or May's is 30 per cent lower than April's (any two consecutive months), they will qualify for this rental rebate of up to 0.5 month of net rent," MIT said.
"The support measures for our industrial tenants are more than comparable with those offered by private landlords from the industrial sector."
But industry observers say the economic recovery will likely be gradual as safe distancing measures, even after the circuit breaker period ends, are expected to be in place for the rest of the year till the first half of next year.
Mr Wee said: "So what kind of rental help will businesses need for the second half of the year? If landlords are looking at the possibility of getting only four to six months of rent for the year, what are the solutions for them?"