Major US retailers don’t want to pay rent in full.
Subway and many other large companies are telling their landlords they will withhold or slash rent in the coming months after closing stores to slow the coronavirus, according to Pymnts.
Mattress Firm sent its landlords a letter last week offering options for how the situation could be mitigated, according to the report. It said it would pay less in rent in exchange for longer leases, citing the decline in revenue and store closures as reasons, both spurred by the viral pandemic. Mattress Firm has around 2,400 stores in the country. Subway, on the other hand, with 20,000 locations, has been analyzing various ways to address the problem and sent out a letter to its landlords saying it might not pay rent in full. The Cheesecake Factory is another example, as CEO David Overton wrote a letter addressed to the company’s landlords saying that the “severe decrease in restaurant traffic has severely decreased our cash flow and inflicted a tremendous financial blow to our business.”
These moves, Bloomberg reports, marks the next phase in virus fallout: What happens to billions in rent owed for businesses that have been closed? The stakes are high. Retail has a slew of big chains in turnaround mode. And if they do withhold payments, there would be a ripple effect. Landlords can’t afford to stop collecting rent for long, with many property owners sitting on loads of debt.