New Zealand’s biggest commercial landlord has apologised for ‘pay up’ letters to tenants after Government criticism, but retailers see little real change in its uncompromising stance. James Elliott and Nikki Mandow report
Kiwi Property Group, New Zealand’s biggest listed commercial landlord, has backtracked and apologised for its hardline stance on rents, after receiving very public slap-downs from Prime Minister Jacinda Ardern and Finance Minister Grant Robertson.
Earlier this month, tenants of New Zealand’s largest mall, Sylvia Park, got a letter from Kiwi Property telling them they had to pay rent and operating expenses in full during the Level 4 lockdown, despite none of them having access to their premises, and many of them having no income at all. Kiwi also owns Westgate Lifestyle Mall in West Auckland, The Base in Hamilton, Lynn Mall in New Lynn, the Vero Centre in Auckland and ASB North Wharf at the Wynyard Quarter.
A standard form letter dated April 3 made it clear NZX-listed Kiwi Property, which owns $3.2 billion-worth of property and made $138.1 million profit in the last financial year, wouldn’t be offering tenants any rent relief.
“We wish to remind our tenants that their obligation to pay rent and other usual charges continues throughout this period unless the lease expressly states otherwise,” the company said, as Newsroom reported earlier.
On Tuesday Grant Robertson was unimpressed, and Ardern was even more critical on Wednesday.
Asked to comment on the Kiwi Property letter during an Epidemic Response Committee meeting, Robertson said Kiwi Property’s stance was “an unacceptable approach” and “not in the spirit of what New Zealand is trying to do”.
When Newsroom put the minister’s comments to Kiwi Property that afternoon, the company’s CEO Clive Mackenzie issued a mea culpa.
“We’re committed to working with our tenants, especially the small and medium-sized businesses, to help them through this challenging period and sharing a fair proportion of the financial impact caused by Covid-19,” Mackenzie said.
“The correspondence we sent two weeks ago didn’t reflect that. We got it wrong and we’re sorry.”
“We want our tenants to come through the pandemic strongly and be in a position to reopen and scale-up once normal trading resumes. We’ve contacted them to reiterate that and are in discussions with a number of businesses about rent relief and other temporary support.”
Ardern doubled down on the criticism at a news conference on Wednesday when asked about behaviour such as Kiwi Property’s.
Work with your tenants, and just be a good human being
She told a news conference landlords needed to be good citizens.
“It is utterly unfathomable in this situation to see some of what we’ve seen, including increases on commercial rent,” she said.
“I would urge landlords to think about what happens if you do remove someone from your commercial property. Who will tenant it now?.
“Work with your tenants, and just be a good human being.”
Tenants see no softening
The idea Kiwi Property was talking to struggling tenants about rent relief was news to the two Sylvia Park tenants Newsroom spoke to.
Both said the only concession they had received from Kiwi Property to date was an offer to defer their rent payments, not to give them any sort of rent rebate.
Richard Thompson owns a business with 20 retail sites around the country. He doesn’t want to have the company name used in this story, but his stores don’t sell anything classed as essential, so his income during lockdown is zero.
But his monthly outgoings add up to $600,000, even after adding in the Government’s wage subsidies. Two thirds of that is rent, with the biggest portion coming from his nine stores in high-rent corporate malls, six of them owned by Kiwi Property.
“Whether my business lives or dies is actually dependent on these nine stores, as they are the really expensive ones,” Thompson said.
“I have been fobbed off by various people in their organisations, including by Kiwi Property. They have given me to understand at one point or another that they accepted my position and would take my case ‘higher up’. But they then came back with nothing.”
Thompson’s experience with his smaller landlords has been quite different. All have come to the party with rent holidays of various degrees “to help us get through”, he said.
“A lot of them are saying we can pay no rent or have given us a significant discount on rent over an extended period.”
Not Kiwi Property, which to date has not been prepared to discuss any rent arrangements, Thompson said. Instead, the company had told Thompson and other tenants they should look for Government relief to get them through, but hadn’t offered to share the pain themselves.
“If tenants are having issues with their rent, we encourage them to contact their bank and us, as well as exploring the Government assistance programmes that have been put in place,” a Kiwi Property spokesperson told Newsroom last week.
Thompson said he did contact Kiwi Property, but the company didn’t want to talk about reducing the rent.
“They have been using the [lack of detail on the] Government scheme as the reason they won’t engage. My assumption is they have been expecting the Government will come up with dollars.”
In fact, the Government’s most recent package for businesses, announced on Wednesday did not offer any help to SME tenants. But even if it had, Thompson said big corporate landlords should be taking some of the financial hit as well.
“I find it offensive these guys want the pain to be shared between the taxpayer and the tenant. I want them to be taking as much pain as the taxpayer and the tenant,” he said.
“I think there will be a role for the taxpayer, but these guys shouldn’t be sitting on the sidelines waiting for the taxpayer to bail them out.”
Clive Mackenzie says Kiwi Property is prepared to engage in the process.
“We would welcome the opportunity to work with Government to develop a response that supports all stakeholders, as we navigate this unprecedented situation,” he said in his statement to Newsroom.
Deferral, not reduction
Meanwhile, another Sylvia Park tenant told Newsroom she had heard from Kiwi Property, but it was prepared only to defer the rent, not reduce or wipe it, even during the lockdown.
“Last Thursday, we finally received a call from Kiwi Property, although it wasn’t the mall manager, simply one of the assistants who was reading off a scripted letter that we had already received from our lease broker the day before.
“Kiwi Property has now stated that they will defer the rent – likely due to all of the backlash they have received. There will be no reduction, just a deferment of payment to a later date.”
She hadn’t heard from the company since, although was pleased it may be changing its stance.
“It is great that they have finally put their hand up and stated that they initially handled the situation poorly – it’s a start at least.”
A third tenant, not in Sylvia Park mall, but in one of the company’s Auckland CBD office blocks, said the only concession he had been offered by Kiwi Property was to not hike the rent.
“Whilst we await more information, effective 1 April 2020 your landlord will hold the current rent and operating expenses for your premises for the duration of the current four week lockdown and then until further notice,” a letter dated April 3 from Kiwi Property said.
“This means that your current monthly rent and operating expense charges will remain unchanged for the duration of the current four week lockdown and then until further notice.”
The company enclosed an invoice for April’s rent.