Commercial Real Estate Collective "Epidemic Prevention": 79 Operators To Reduce Rent Concessions Of Nearly Billion

Before and after the Spring Festival in 2020, the outbreak of pneumonia caused by new coronavirus broke out and spread rapidly. With the decrease of people's behavior of going out and gathering, the incomes of various shopping malls were greatly affected. During the epidemic, many commercial real estate operators launched donations, rent free and other preferential activities to combat the epidemic.

In February 2nd, red star announced that the rent and management fees of the 82 self operated shopping malls were eligible for the month. Earlier, Wanda, Longhu, RC, Huarun and other housing companies have launched similar rent relief measures.

According to statistics of donations and measures of 109 member units of the real estate committee of the real estate association (hereinafter referred to as the "full union commercial real estate Working Committee"), as of now, 79 commercial real estate operators have implemented preferential policies for rent reduction. The preliminary estimate of the economic report in twenty-first Century shows that the total scale of its profits is nearly 10 billion.

According to incomplete statistics, as of February 2, 2020, the amount of direct donations in the shopping center industry was about 1 billion.

Behind the rent relief of commercial real estate operators is the decline in front-end business revenue brought by the epidemic. - Song Wenhui photo

Rent reduction is a common practice.

Behind the rent relief of commercial real estate operators is the decline in front-end business revenue brought by the epidemic. As the epidemic occurs during the Spring Festival, and the Spring Festival is often the traditional peak season of the major shopping malls, the impact is the first to bear the brunt. According to the twenty-first Century economic report, during the Spring Festival, most shopping malls were crowded.

A few days ago, Jia Guolong, chairman of Xibei food and beverage company, said in an interview with the media that Xibei restaurant had more than 400 Xibei oats village restaurants in more than 60 domestic cities. Under the good conditions, the attack on the Spring Festival holiday caused 7-8 yuan of economic losses to enterprises.

The "special investigation report on the fight against epidemic situation in the shopping center industry" released by the joint commercial real estate committee pointed out that during the Spring Festival, almost all shopping centers had a significant decline in passenger flow and sales. For a single brand, according to the reporter's understanding, seabed restaurant chain is expected to lose more than 8 million 500 thousand of its daily turnover and the occupancy rate of more than 470 stores in the Asia duo chain hotel has dropped to freezing point.

To this end, commercial real estate operators generally reduce rent, management fees, property fees, etc., as the main support.

According to incomplete statistics, there are nearly 600 department stores and shopping centers in this operator's rent reduction operation. In terms of time, the short period is one week and the length is two months. On the way of reducing the rent, over 70% operators use the rent to halve, and some of them are exempt from the rent. Among them, Wanda and Hua Runjun issued the rent free notice.

But these measures will also hurt operators' profits. Red Star Mei Kai Long pointed out that this rent free company's operating income in 2020 (rents and management fees total amount) is about RMB 5.3-5.9 billion, and the impact on the company's net profit in 2020 is about 3.8-4.3 billion yuan.

Although the implementation of the "rent reduction" in Longhu, but the reduction time is up to 67 days, and the rental cost includes Wuguan fee and promotion fee. Roughly estimated, the rent relief in Longhu will exceed 500 million yuan. As the largest commercial real estate operator in China, Wanda estimates that the rent will be reduced by about 4000000000 yuan.

Wang Yongping, President of the all union commercial real estate committee, pointed out that rents are the main source of shopping malls. Rental income is divided into fixed rents and bottom guaranteed prices (guaranteed rent + sales volume). According to their understanding, the practice of some commercial real estate developers is to remove the "bottom price" directly, which will have a greater impact on the profits of operators.

How to recover the loss?

The collective rent reduction operation of the commercial real estate is a gesture of taking the overall situation into consideration, but practitioners are also thinking about how to further improve the operation mode of commercial real estate so as to make it more capable of resisting risks.

Insiders pointed out that the commercial real estate industry chain is closely linked, and has higher requirements for the operators' integration of resources and operational capabilities. In management, it involves not only commodity management, operation management, financial management, human resource management, property management, but also customer relationship, government relationship and public relations handling. Only by making up for the short board can we have stronger ability to resist risks.

Wang Yongping pointed out that the epidemic is natural disaster, and the industry loss is huge. But if we reflect properly, some of the existing short boards can still be made up. For example, as long as new measures are launched, there will be more entry and imagination in online and smart commerce.

Some people in the industry have cited the economic trend after SARS, for example, after the SARS epidemic, the total retail sales of society have been rebounded and developed rapidly. The epidemic may also push the business sector to explore new business models.

Wang Yongping believes that there are still many variables in the follow up market and can not be controlled only by unilateral measures. "In the short term, developers have bigger stalls and stronger strength, so they can take the initiative to make profits. When the market continues to descend, the government's tax system and bank lending system should also be added.

People in the legal profession also pointed out that a government, Party A and Party B should jointly formulate three laws. For tenants who want to reduce rent or terminate the lease contract due to epidemic situation, they can refer to the provisions of force majeure, change of circumstances and fair principle.

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