Malls, retailers back to the table over revising rental agreements

Mall developers and retailers are at the negotiating table again as sluggish business is forcing the two to rework rent pacts. While mall owners gave full and, in some cases, half waivers to retailers on monthly rentals during the lockdown months of March, April, and May, retailers say this may not be enough.

Some mall owners had agreed to short-term deferrals of rent, worked out a revenue-share pact, and even offered sharp discounts on existing rentals for the lockdown months, saying they remained sympathetic to retailers.

Mall owners now appear willing to give a 20-30 per cent waiver on rentals. Discounts on fixed rent or minimum guarantee payments are also lower as distinct from the peak lockdown months, persons in the know said.

Retailers say they want more, arguing that rental waivers should be extended for a few more months, since business is not expected to pick up before the Dussehra-diwali period, which falls in October-november.

“Localised lockdowns and weekend curfews continue to persist in many cities despite the Unlock programme. Business hours also remain curtailed,” said Anand Agarwal, chief financial officer, V-mart Retail, which is into fashion and lifestyle retailing. “This has an impact on business. Retailers in both malls and high-street properties are re-negotiating their rental terms in view of the current environment.”

Nilesh Gupta, managing director of Vijay Sales, said Diwali would be a better occasion for retailers to look forward to in terms of business. A senior executive with a Mumbai-based mall firm, which has properties in North India, said the firm would have to go for a second round of negotiations with retailers. Mukesh Kumar, CEO at Infiniti Mall, said: “We are getting requests for pure revenue-share arrangements from retailers. But our agreements do not permit this.” An executive with Phoenix Mills said most of its retailers had agreed to a rent waiver of 30 per cent, following the reopening of malls.