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Mar 24, 2020
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Dunelm joins UK retailers seeking rent reductions, delays

By
Reuters API
Published
Mar 24, 2020

Home furnishing retailer Dunelm on Tuesday was the latest major UK retailer to say it was launching talks with its landlords on rent reductions, as it seeks to find a way through a coronavirus crisis that has forced it to shut all stores.


Photo: Dunelm




The chain, which also said it was drawing down all of its available credit to ride out the pain of the UK-wide shutdown, joins a growing list of companies who say they are seeking lower rent or simply will not pay when it comes due.

Burger King boss Alasdair Murdoch, who closed 500 stores on Tuesday, told the BBC's Today programme he would not be paying rent this week as he prepares to cover staff wages until government support begins to flow to the company in late April.

Wagamama owner Restaurant Brands said last week that as part of its own cutbacks to survive a complete collapse of business that may last weeks or even months, it was assuming it would be able to cut rents in half.

Restaurant and pub industry body, UK Hospitality, has warned that the vast majority of businesses will be due to make advance quarterly payments of rents totalling billions of pounds on Wednesday.

The British government, scrambling to deal with the economic fallout of the crisis, said last week that landlords should not evict commercial tenants who do not pay their rent due to the coronavirus outbreak.

Burger King's Murdoch said he thought that move would hold.

"We're not intending to pay our rent tomorrow," he said.

"Most landlords as well have been reasonable about this. There are a number of creative solutions as well, we could add three months onto the end of the lease for those people who are unable to pay ... at the end of these three months."

A halt in payments, however, also raises the question of whether landlords will default on their own debt commitments.

Even before the government began to shut down British public life earlier this month, mall owner Intu Properties was flagging doubts over its ability to continue operations in the face of a collapse of several retail tenants.

The company did not immediately respond to Reuters emails about this week's rental payments and whether it was in talks with existing tenants.

Dunelm, for its part, said it was drawing down 175 million pounds in available credit, cancelling its interim dividend and reducing executive pay for the next three months, while expressing confidence it could ride out the crisis without breaching its own debt commitments.

The company said its net cash position was 11 million pounds at March 21.

 

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