COMMERCIAL landlords and their tenants are at odds over the property tax rebate intended for landlords to pass on to renters.
The Restaurant Association of Singapore (RAS) fired the first salvo on Monday, calling out landlords for not delivering on their publicly announced rental rebates for food and beverage (F&B) operators, adding that it was "deeply disappointed".
A number of mall operators, including CapitaLand, Mapletree Commercial Trust and Perennial Real Estate Holdings, had announced rental relief in a bid to pass on savings from a 15 per cent property tax rebate announced during Budget 2020 to qualifying commercial properties.
However, only Jewel Changi, Changi Airport Group, JTC and NParks have notified their tenants of the rebates, RAS said. All four are government or government-linked landlords. RAS added that all other landlords and mall owners have been "slow to react to the appeals of their F&B tenants".
The association singled out CapitaLand, Singapore's largest mall operator, accusing it of not delivering on a promise of 50 per cent rental rebates for restaurant tenants. Instead, RAS said restaurateurs operating in CapitaLand's suburban malls, which form the bulk of its portfolio, have not been granted rental rebates at all. Those in urban malls have only been offered a 10 to 15 per cent rebate.
In response, CapitaLand said it's "unfortunate that the entire relief package has not been fully comprehended by RAS", despite ongoing engagements between the two. Last month, it announced plans to provide rental relief, including flexible rent payments and a one-time rebate of up to half-a-month, to tenants in a "targeted manner".
Sources tell BT the unhappiness extends to retailers as well. Tenants say there seems to be a lack of clarity on the support measures landlords will provide to help tenants weather the coronavirus situation. BT understands that different malls have implemented varying relief measures, ranging up to a 40 per cent rental rebate for a month to qualifying tenants. Other landlords are allowing tenants to use part of their security deposits to offset base rents; but some tenants bemoaned that while these may temporarily ease cash flow, they do not constitute rebates as the security deposits come from their own pockets.
In fact, over the last two weeks, an informal group comprising mostly retailers has banded together amid what they perceive as landlords dragging their feet. As at Feb 28, the group represents nearly 1,200 stores mostly under real estate investment trust (Reit) malls, with tenancy in retail, F&B or services, BT understands.
Responding to queries by BT on Monday, a member from the group said they welcome RAS' lobbying.
A survey among group members showed over half recorded a sales drop of over 40 per cent since the virus outbreak. "We do not have deep pockets, and are facing severe difficulties in cash flow and high business costs… Malls have more than enough profits to cushion themselves, but they're not making the move to share in this responsibility amid the Covid-19 situation... a lot of tenants are angry with that as tenants are left to bear the full brunt of sales losses," a source said. Some say they have had to retrench workers or cut salaries.
Separately, a Wheelock Place retailer, who asked not to be named for fear of landlord backlash, told BT the mall's management has been unresponsive, despite attempts to contact them. Granted, some of these businesses have not been doing well prior to Covid-19, but the latter has worsened things. "My lowest average daily sales recorded last month was S$0 for six days in Feb, which was a first for us," one retailer said.
But part of the hold-up may also be due to the landlords waiting for more clarity on how they qualify for the property tax rebate, even as they reiterate their commitment to passing on the savings to tenants.
One uncertainty lies in whether properties with mixed office and retail use qualify, as the Inland Revenue Authority of Singapore's (IRAS) e-tax guide states that no rebates shall be given to "any premises or a part of any premises used... as an office, a business or science park...".
A spokesperson for Perennial Real Estates said: "Landlords have no clarity as to whether their properties qualify, particularly for integrated developments which comprise office and retail components." Still, Perennial said it remains committed to passing on the full rebate to qualifying tenants, all of whom have been informed. The rebate offered to qualifying tenants works out to about 30 per cent each.
Frasers Property, which now counts landlord AsiaMalls as its subsidiary, is also understood to be taking time to parse the government's tax guide and get directions from the authorities.
In response to BT queries, IRAS said it is still "finalising the details" on the property tax rebate, which will be ready later this month.
Meanwhile, some landlords say they are making progress in helping tenants. CapitaLand said it's in the process of reviewing its portfolio of 3,500 leases and aims to finish this by the end of March. By which time, tenants will be informed of their respective rental relief packages. For now, the landlord said it has granted rental rebates of 20 to 30 per cent over two months to eligible tenants in its downtown malls, which have been more affected by the virus outbreak.
UOL said it has sent out letters to inform eligible tenants - "almost all" of them in its malls - of a 15 per cent rental rebate, and received some positive feedback. Far East Organization is understood to still be in the process of reaching out to tenants one-on-one. NTUC Enterprise, which runs real estate arm Mercatus Co-operative Limited, will communicate support measures, including "targeted rental assistance", to tenants "shortly". Lendlease and SPH Reit did not venture further than their latest public statements. ARA Trust Management and Mapletree were unable to respond as of press time.
Christine Li, head of research for Singapore and South-east Asia at global property consultancy Cushman & Wakefield, noted that the objectives of government landlords and private landlords are different. According to Ms Li, the government serves as an infrastructure provider, where retail is part of amenities provided to the community, rather than being business driven.
On private landlords, she said: "They will try to give rebates, but I think their immediate priority is to bring back the foot traffic… and the way to do so is not through cutting rent." She cited the offer of free parking after certain hours at their malls, and other incentives such as advertising to get people out of their homes. "Cutting rents directly may ease some pressures, but if you don't get customers back, then it's not sustainable," added Ms Li.