CapitaLand income tumbles as tenants granted rent waivers
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Property giant CapitaLand said it will further waive and potentially defer rent for qualifying small and medium-sized enterprise (SME) tenants, though this will lead to an “adverse impact” on its earnings this year.
The move is in accordance with the latest Covid-19 (Temporary Measures) (Amendment) Bill in Singapore, which requires landlords to provide SME tenants with additional rental relief amid the pandemic.
The timing and payment of the rental rebate and any deferral are dependent on the authorities’ assessment of the eligibility of the group’s SME tenants, said CapitaLand in a statement on Monday (June 8).
CapitaLand group chief financial officer Andrew Lim noted that the financial strain from the Bill “remains high”, despite assistance to defray the group’s ongoing operating costs through measures such as the Jobs Support Scheme and other specific measures for Singapore real estate investment trusts (Reits).
“The financial strain that the measures mandated by the Act will place on the group remains high and will have an adverse impact on CapitaLand’s financial performance this year. We, therefore, maintain our conviction that the impact of the regulatory intervention be applied objectively, transparently and proportionally, as a shared responsibility across all stakeholders, so that the commercial real estate ecosystem can continue to be competitive locally and internationally after the crisis,” he added.
Under the Government’s new rental relief framework, SMEs that have seen a significant drop in their average monthly revenues will receive an additional two months’ waiver of base rental for qualifying commercial properties, and an additional one month’s waiver of base rental for industrial and office properties.
These additional rental waivers will be borne by the landlord, and be applied to June and July 2020 for SMEs in qualifying commercial properties, and May 2020 for SMEs in industrial/office properties, as long as their leases or licenses were in force on April 1.
Before the Bill was passed, CapitaLand said it had already provided some level of rental relief and committed to pass on any government property tax rebates and cash grants to eligible tenants when informed.
“Additional rental waiver was granted from March 27 to 31 for tenants ordered to close their premises since March 27.”
CapitaLand Mall Trust has committed a rental relief package of approximately $114 million, which translated into rental waivers in April and May for almost all its shopping mall tenants, inclusive of the value of property tax rebates
Additional rental waiver was granted from March 27 to 31 for tenants ordered to close their premises since March 27. Some tenants were also granted a waiver on their turnover rent and were permitted to use the one-month security deposit to offset their rents in March, said the group.
Inclusive of the Government’s property tax rebate and additional rental assistance, Ascendas Reit – which is under the CapitaLand group – had waived two months’ rent (from April to May) for retail and food and beverage tenants within individual buildings and amenity centres in its portfolio.
CapitaLand Commercial Trust also extended rental relief to retail, F&B and services tenants whose businesses have been hit, on top of passing down the applicable property tax rebate to eligible tenants.
“CapitaLand remains committed to working with our tenants through these trying times. It is in our interest to see our tenants ride through this with us. We are all in this together because everyone in the ecosystem has been impacted,” said Mr Lim.
Questions & Answers
Q.What is the primary reason for CapitaLand’s income reduction this year?
What is the primary reason for CapitaLand’s income reduction this year?
CapitaLand's income is set to fall due to further rent waivers and potential deferrals for qualifying small and medium-sized enterprise (SME) tenants. This action is mandated by Singapore's latest Covid-19 (Temporary Measures) (Amendment) Bill.
Q.How much additional rent relief are SMEs eligible for under the new government framework?
How much additional rent relief are SMEs eligible for under the new government framework?
Under the new framework, SMEs will receive an additional two months' waiver of base rental for qualifying commercial properties. For industrial and office properties, they will receive an additional one month's waiver of base rental.
Q.Which months do the additional rental waivers apply to for commercial and industrial/office properties?
Which months do the additional rental waivers apply to for commercial and industrial/office properties?
The additional rental waivers for SMEs in commercial properties apply to June and July 2020. For SMEs in industrial/office properties, the waiver is applied to May 2020, provided their leases were active on April 1.
Q.What was the total value of the rental relief package committed by CapitaLand Mall Trust?
What was the total value of the rental relief package committed by CapitaLand Mall Trust?
CapitaLand Mall Trust committed a rental relief package of approximately $114 million. This amount translated into rental waivers for nearly all its shopping mall tenants during April and May, including the value of property tax rebates.
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