REIT landlords rally to ailing tenants at rent deadline

* Q2 rental payments fall due for many tenants on March 25

* Pledge for open discussion on emergency rental concessions

LONDON, March 25 (BestGrowthStock) – Some of Britain’s biggest real
estate landlords have pledged to go “the extra mile” to support
distressed tenants as the payment deadline for second-quarter
rents clashes with the toughest trading outlook seen in years.

In an unprecedented joint action co-ordinated by the British
Property Federation (BPF), firms including Hammerson (HMSO.L: ),
Hermes, Land Securities (LAND.L: ), British Land (BLND.L: ), Segro
(SGRO.L: ) and PRUPIM (PRU.L: ) have committed to open dialogue on
flexible leasing terms to protect vulnerable businesses.

“We are working hard to turn property from an industry of
faceless rent-collectors into a sector that truly cares for its
customers and one that is prepared to support them,” Ian Coull,
chief executive of Segro (SGRO.L: ) said.

“In these difficult economic times it is essential that our
customers and potential customers talk to us as soon as they
identify an issue, as we recognise that small changes for us
could secure their and our long term future,” he said.

For many occupiers, March 25 is quarter payment day when
rent for next three months falls due. Fears abound a greater
proportion of businesses may struggle to meet obligations after
a 2.5 percent cut in Value Added Tax (VAT) was reversed and
heavy snowfall squeezed sales in the first three months of 2010.

The joint action comes two weeks after BPF warned against
the possible abuse of insolvency practices in by profitable
tenants seeking to renegotiate leases signed in better economic
times. [ID:nLEE6EB001]

Now, financial services firm KPMG has once again predicted
more business failures and further insolvencies at the end of
March, as the rent demands place fatal strain on cash flows.

“March rent quarter is often one of the most difficult
crunch points for struggling retailers,” said Richard Fleming,
UK Head of Restructuring at KPMG.

“The credit squeeze has served to magnify the situation with
even healthy businesses struggling to keep a handle on working
capital requirements,” he said.

Some under-pressure tenants have called for monthly rents so
they can better manage their outgoings, but Hammerson — one of
the UK’s biggest retail landlords — said only two firms had
approached it for monthly payment terms this quarter day.

“We consider each retailer case on its individual merit, the
most important part of this process is the early disclosure of
hardship by a retailer and the provision of full accounts to
establish their financial situation,” said Duncan Grubb, head of
credit control at Hammerson.

“While we work with those who can provide a strong case
highlighting how they can continue trading successfully we must
also ensure that leases are honoured,” he said.

Investing Basics

(Reporting by Sinead Cruise; Editing by Andrew Macdonald)
(See www.reutersrealestate.com for the global service for
real estate professionals from Reuters)

REIT landlords rally to ailing tenants at rent deadline