DLF, one of the largest mall operators in the country, has proposed a rental programme to support the rental partners amid the ongoing coronavirus crisis. The plan proposes a waiver of as high as 100 per cent on minimum guarantee (MG) lease rent for rental partners such as shops, multiplexes and restaurants. While the rent will be as per billed terms for March until lockdown, zero MG rent has been proposed from start of lockdown until June 15, according to the details of the support programme sent to tenants.
"We are sympathetic to the situation you are facing, and we have also been faced with a cessation of revenues whilst our financial obligations to external shareholders have remained.We have worked on a rental programme that will support our rental partners to restart your business," DLF Promenade Limited said in a letter. DLF operates a few of the leading malls in the country such as DLF Avenue Mall, Mall of India, DLF Promenade, among others.
A waiver of 75 per cent has been proposed from June 16 to June 30. Similarly, a waiver of 50 per cent, 25 per cent and 10 per cent has been proposed for Q2, Q3 and Q4, respectively. "In case of MG/revenue share agreements, the higher of the revised MG/revenue share % will be charged," it added.
MG lease rent is a rent type used in commercial real estate transactions where the tenant pays base rent at the lease's inception. But it takes on a proportional share of some of the other costs associated with the property as well, such as property taxes, utilities, insurance, and maintenance.
"We at DLF Promenade, Vasant Kunj look forward to your working together and welcome back our customers to a safe and wonderful shopping environment. We will soon be sharing an addendum detailing the terms and conditions for this support programme. In the meantime, you are requested to kindly acknowledge this letter and start your business operations at our malls," the letter noted.
Earlier, DLF denied reports that DLF Malls is likely to waive rent for its tenants such as shops, multiplexes and restaurant chains. "This (rent waiver) is all hearsay. Our stance is that we want this to be a 'shared pain'. Our proposal is awaiting approval," Pushpa Bector, CEO of DLF Malls, had told BusinessToday.In.
It comes amid the ongoing tiff over rent waiver during lockdown, with a section of restaurants and store-owners insisting on relief as a condition to re-open after extended closure due to lockdown. A tenant operating out of the two DLF malls recently told BusinessToday.In that he expects complete rent waiver for the lockdown period and moving to revenue-share model hereon as footfall was expected to remain much low for quite a long period.
Other major mall owners are also reportedly 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. Reports suggest that mall revenues are likely to fall by 50 to 70 per cent over the next six-nine months as compared to last year.
Some of the other malls are reported to have agreed to go for complete waiver of rent for the lockdown period. Sources earlier told BusinessToday.In that Lulu, Prestige Group and Mantri Square Mall have given good deals to the tenants.