"Mass repossessions" if government does not step in
Sherlock, who works with Imbiba-backed brands Vagabond and Farmer J, and also Pizza Pilgrims, told MCA last week that while some landlords were being helpful and offering rent free periods or rent deferment, many were not.
He said unless the government steps in immediately and orders landlords cannot forfeit leases due to non-payment of rent, there would be “mass repossessions on a scale never seen before”.
“It will be an absolute bloodbath”, he said.
Sherlock told MCA he was involved in some 25 rent negotiations as the 25 March deadline looms for quarterly rent payments.
He said he was talking to a variety of landlords, large and small, private and institutional.
Some like Argent, Land Securities, And Network Rail are offering concessions such as three months’ rent free, while other major institutional landlords are saying no support is available at this stage.
Meanwhile some private landlords, while sympathetic to the situation, have investors and need rent in order to meet their own liabilities.
Sherlock said: “It’s the minority of landlords that are making meaningful concessions. The vast majority say they need their rent in some form or other.
“Unless the government stands behind both landlords and tenants, and say landlords cannot enforce lease forfeiture on the lease for a period of six months, there’s going to mass closures.
“[In the past] week companies have been making horrific choices about shedding staff, and now coming sharply into focus is the rent reviews.”
He said Shaftesbury and Capco had been helpful and amenable to discussions.
Some landlords are essentially deferring discussions until the summer.
Sherlock added: “Some are saying, ‘we’re not expecting to see any rent, let’s have a conversation at the end of June. We won’t take action for non-payment.’
“It’s a sensible approach and gives business a lifeline.”
Equally, government intervention is required to protect landlords’ interests, he said.
“You can’t just say, ‘we’re not going to pay’. When you sign a lease, you are covenanting to pay rent, service charge and all the rest. It’s right and proper that tenants pay their rent. If they can’t due to no fault of their own, there has to be protection for landlords so that tenants can make it to the other side.
“Unless that happens, I think the chain of events will be catastrophic.”
This article originally appeared on BigHospitality's sister site MCA. For more information click here.
