While the lodging sector was the first to be impacted by the COVID-19 pandemic as travel virtually ground to a halt, the retail sector wasn't far behind with social distancing guidelines and eventual shuttering orders implemented by most state governors and/or city mayors.
Now that April 1st has passed, a glimpse into retailers' ability and/or willingness (given future uncertainty) to pay rent is now available. A special Pulse Poll commissioned by the Wall Street Journal suggests that about half of U.S. small businesses haven't paid their full rent or mortgage for the month of April. In addition, news reports indicate that some major retail chains announced prior to April 1st that they would not pay their April rent in full; with landlords reporting that one major sporting goods retailer offered to pay 50% rent on its 384 closed U.S. stores, and when the stores reopen, to then pay a percentage of sales in lieu of any rent for 12 months and a national restaurant chain announcing that it will not be able to pay its April rent at its nearly 300 locations.
A review of legislative actions taken by governments in larger retail markets illuminates opportunities for relief available to retailers and potential issues for landlords in exercising their rights under leases.
This alert memorandum provides a summary of commercial real estate eviction moratoriums and other commercial real estate relief actions that impact landlords, tenants, lenders and borrowers in six states with significant concentrations of retail tenancies.
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