Last weekend, Anthony Lorenz’s phone was ringing off the hook. Client after client was calling the London-based veteran tenant rep advisor, all with the same problem. Revenue had fallen off a cliff, cash flow was tight and on 25 March the quarterly rent was falling due.
“I had clients I hadn’t spoken to for two years, ringing out of the blue, asking for help talking to their landlord,” the managing director of The Lorenz Consultancy said. “We act for some of the biggest clubs, bars and restaurants in the West End. Our clients were telling us takings from the weekend were at least 70% down, often as much as 90%. One club told us that instead of taking £130K over the weekend they had taken £14K. If landlords don’t help out, the leisure industry in the West End will collapse.”
And perhaps beyond. As a result of coronavirus, the UK’s pubs, bars, restaurants, theatres, cinemas and nightclubs are on their knees. Lorenz was fielding calls from struggling clients before the UK government on Monday advised the public to avoid such venues, which is likely to hit trade even harder.
With little or no revenue coming in, many companies will only have enough cash to get through the next six to eight weeks, after which they will go out of business, trade body UK Hospitality said. Predictions for job losses are running into the hundreds of thousands.
Cinema operators like Cineworld have said they will be closing sites indefinitely to preserve cash. Theatres have had to postpone productions and many have refunded tickets. The share prices of listed UK pub, café and restaurant companies fell by between 25% and 45% on Monday. Tate Modern, one of London’s top tourist attractions, has closed indefinitely.
The government did not specifically advise people to stay away from high streets and shopping centres, but nonetheless already-struggling retailers have been hit, such as fashion chain Laura Ashley, which went into administration Tuesday.
The property industry has a role to play here, and can provide vital support for tenants in the form of rent deferrals or cuts. While this idea is great in theory, it poses problems in practice: Landlords might have their own cash flow issues and rely on the rental income they receive from tenants to pay staff and make loan repayments.
For Lorenz, who negotiates with landlords on behalf of tenants, and whose clients include clubs like China White and the Cuckoo Club, landlords have to step in to help struggling leisure tenants, for the sake of their own income streams and for the leisure industry as a whole.
“A landlord has two choices,” he said. “They can come to the rescue and help with cash flow and stick with current operators who know what they are doing. Or they can get the property back from a liquidator, because people will go out of business, and they will be faced with the challenge of finding someone else.”…