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Retail in times of COVID-19

Mall landlords with a higher concentration of nonessential tenants have collected around 10% to 25% of rents, while centers with more essential tenants such as grocers and pharmacies have collected 50% to 60% of rent… Big retailers that have failed to pay all or some of this month’s rent include: Equinox, Dick’s Sporting Goods, Burlington Stores, Petco Animal Supplies, LVMH Moët Hennessy Louis Vuitton SE, Victoria’s Secret, and Staples, WSJ reported.

  • Worth Noting: Many nonpaying tenants also say the pandemic is a force majeure, or an event outside their control that prevents them from meeting contractual obligations. The uncertainty around stores reopening makes it difficult to prioritize rents if revenue continues to be depressed.
  • Be Smart: McDonald’s real estate strategy insulates the the restaurateur from a downturn. The company owns the real estate for its corporate-controlled and franchisee-controlled restaurants. Last year, McDonald’s collected $7.5 billion in rent from franchisees, which represented a little over one-third of corporate revenue in 2019, NREI noted.
  • Partial cushion: The company owns about 55 percent of the land for its restaurants and about 80 percent of its restaurant buildings. As of Dec. 31, McDonald’s owned a little over $6 billion worth of land, and more than $29.6 billion worth of buildings and improvements on owned or leased land.

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