Why have you come out publicly in support of the shopping center owners and their right to demand rent from tenants during this crisis? Do you think there’s a tendency to support the little guy (the retailers) at the expense of the large center owners?
Yes, exactly. I believe that that the entire business system is connected. If tenants stop paying rent, then the owners of shopping centers will lose their income. They’ll begin having problems meeting their own obligations to suppliers, to financial institutions as well as to their employees. My goal is in the name of the Association of Real Estate Development is to support maintaining stability to avoiding secondary corporate insolvency. That means finding a solution to help tenants to pay their rent in full, if possible, or to pay at least part of it and to defer the remainder until later. If tenants were to receive support from the state and they don’t use it at least in part towards the partial payment of their rent, then the entire system could break down. What would happen if the owners of shopping centers got into financial difficulties? We need to understand that we’re talking about a critical real estate network. If we destabilize it, we’ll destabilize the entire system and we’ll risk secondary corporate insolvency. That’s why our efforts are to ensure that any state support be targeted properly. The funds that retailers and entrepreneurs receive from the state should help support the entire system. They should be used also to cover the obligations in the tenants‘ relationships with the landlords.
You’re defending the right of shopping center owners to expect payment, even if they’re open to a dialogue with their tenants on the terms.
Shopping center owners respect their tenants and they understand their situation. The issue is that it’s not possible to solve one group’s problems at the expense of another’s. Shopping centers and landlords in general are doing their utmost to find a solution, but the solution has to be balanced and based in solidarity. So, if there’s going to be support for retailers, then at least a portion of that support has to go towards the fulfilling of obligations to their landlords.
You sound concerned that the public discussion so far has only been about supporting retailers, so they don’t have to fire their employees.
Exactly. We can’t allow a situation in which retailers would solve their own problems, but landlords would lose income. If they fell into financial difficulties and couldn’t meet the obligations they have to their financial institutions, this would then reflect back into economic imbalances and would cause a chain of instability.
Do you actually support this state intervention? Or is the issue that it has to be done in a fair way?
I’m convinced that our state is trying to help the situation in a way that won’t lead to insolvencies and destabilization. The question is how to target the support so that it’s an effective and so that it stays within the system. We’re in favor of the state helping retailers and entrepreneurs to pay their obligations and that rents be included among those obligations.
What did you make of the open letter by some of the country’s biggest restaurant owners, in which they claim the state owes them compensation for closing stores in the name of a national emergency?
We at the association don’t believe that the state of the emergency and the governmental measures to deal with it do not constitute an „act of God“. And that they don’t give companies the right not to fulfill their obligations. We believe that obligations should be honored. On the other hand, we can’t just look at this from a legal point of view but from a business point of view. And from that standpoint, I understand that the situation is extremely difficult for restaurants, hotels and small retailers. Landlords are being flexible, and they want to act correctly towards their tenants. They understand their problems and we don’t dispute them and we’re even in favor of them receiving support. But we want to ensure that any funds they receive go towards meeting their obligations — including those they have with their landlords.
For CIJ Robert McLean
