Prupim, the property investment arm of Prudential, has extended its offer to most UK retailers to pay monthly rather than quarterly rent payments on its existing leases.
In March last year, the landlord became one of the first property developers to allow stores, excluding supermarkets, in its solely owned schemes to pay rent monthly for one year in order to help them trade their way through the recession.
After consultation with tenants the landlord has extended the scheme for another year, at which point it will decide whether to renew it again or even make it a long-term policy.
Prupim director of retail asset management John Duxbury said that he did not want to talk about future decisions, but that Prupim is “open-minded”.
Unlike last year, retailers will be asked to pay an administration fee of £250 per agreement to “help absorb additional costs”, he said. Retailers on schemes such as The Grafton Centre in Cambridge will also have to pay electronically.
Duxbury said: “This move is good news for retailers and for our investors. Retailers are better able to manage cash flow during a tepid economic recovery and invest for their future.”
Duxbury said “fewer businesses than expected” took up the offer in 2009, when 126 retailers paid monthly, covering 700 lease agreements, which was around 50% of eligible tenancies.
He added that the low take-up suggests that many retailers recognise that a monthly rents policy is “not the magic bullet that some portray it to be” and that additional costs might have put off some store groups.
The landlord is also considering how it can reduce service charges at its schemes.
➤ Irish Labour TD Ciarán Lynch has asked the Irish deputy prime minister to introduce “as a matter of extreme urgency” legislation to ban upward-only retail rent reviews on existing leases. On Monday, legislation came into force banning upward-only rent reviews, but on new leases only.
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