Punch-drunk landlords

Capital & Regional’s trading update puts a positive gloss on what must have been a remarkably tough period for the retail property real estate investment trust. Now that nonessential retail has been allowed to reopen in the UK, it is seeing about 95% of its retailers back open for trading and foot count up to 80% of pre-pandemic levels. Consumers who have been largely confined to barracks over a lengthy winter lockdown are clearly bursting to get out of the house, and even a trip to a local shopping centre seems more exciting than another lengthy session on the sofa.

Having been deprived of holidays, restaurants and even the comfort of a refreshing beaker at the local tavern for so long, many have cash to burn, and the hope is that the economy will come bursting back to life once consumers start spending again. Clearly the convenience of online shopping is not going to vanish overnight, but Capital & Regional is banking on the appeal of physical retail and the role its centres play in their communities to get the punters back.

What remains a concern, however, is that it has only collected 59% of the rent due year to date, and there is the prospect of a mighty punch-up between landlords and tenants approaching when the end of a temporary ban on evictions arrives next month.

The hospitality industry in particular is predicting a bloodbath if the government does not step in to address the issue of rent arrears, as well as the ending of the business rates holiday, and it’s going to need creative thinking to find a solution.