The Property Industry Group has announced an industry-wide assistance and relief package for retail tenants that are hardest hit by South Africa’s lockdown in the face of the Covid-19 pandemic.

The initiative, which focuses principally on supporting affected small, medium-sized and microenterprises (SMMEs), also provides relief and assistance to other retail tenants and will be rolled out by landlords nationally.

During the week of March 23, the major representative bodies for real estate in South Africa – namely the South African Real Estate Investment Trust (SA Reit) Association, the SA Property Owners Association and the SA Council of Shopping Centres – formed a collective, which has been coordinating its response to the Covid-19 pandemic, and specifically the economic effects of the 21-day lockdown.

The newly formed Property Industry Group collectively speaks for the commercial real estate sector in South Africa, which includes the country’s large property owners.

The commercial property sector makes a significant contribution to the country’s society, economy, tax revenue and employment, and is responsible for more than 300 000 jobs directly and indirectly in other sectors such as security, cleaning, hygiene and technical services, and building and construction.

Although the relief package’s primary focus is on SMMEs across all sectors, the group will also provide support to large retailers affected by the lockdown.

The initiative targets preserving jobs for retailers, their suppliers and service providers, and in order to qualify for the relief benefits, retail tenants will need to undertake to not retrench staff during the relief period.

The package stipulates that all tenants whose accounts were in good standing at the end of February, “can be assured that there will not be any evictions for the next two months”.

In addition, retailers prevented from trading in compliance with South Africa’s government-mandated lockdown, meaning those trading in non-essential services, and who were in good standing at the end of February, are offered some form of assistance from landlords.

However, the extent of that relief depends on the severity of impact.

For the months of April and May, retail landlords will offer relief in the form of rental discounts where rental will be waived partially or fully and interest-free rental deferments where the deferred rental will be recovered later over a period of six or nine months from July 1 this year, onwards.

Rental includes rent, operating costs and parking rental but excludes all rates and taxes recoveries and utility cost recoveries, as well as insurance, which all tenants will be required to pay in full for April and May.

Each landlord can use their discretion in the relief and assistance that they give a retail tenant, but the property industry package stipulates the minimum that qualifying retailers can expect.

Landlords will, on a case-by-case basis, also consider providing relief for office, industrial and hospitality tenants where the lockdown severely impacts the tenant and where it is justified. These tenants will negotiate relief terms directly with their landlords.

Property Industry Group spokesperson and SA Reit Association chairperson Estienne de Klerk says the relief package is “an equitable way to protect both industries and, very importantly, looks after the drivers of employment creation, namely the SMMEs”.

While the package assumes that South Africa’s lockdown doesn’t extend beyond 21 days, De Klerk notes that, should it be extended, “it is critical for stimulus packages such as those provided by the government, banking sector and the Solidarity Fund to kick-in to weather this storm”.

The property industry package allocates less support to retailers that have insurance cover or receive relief from other sources in order to focus benefits on retail tenants that do not qualify for other assistance.