Ben Pieters

According to both BusinessLive and BusinessInsider of 12 April 2020, Dis-Chem, in a move expected to cause ructions in the already distressed commercial property sector, has embarked on a rental go-slow, according to shopping centre owners – even though it continues to trade as an essential service during the lockdown.

Compare this to Clicks, which is also allowed to continue trading and is paying its normal full rent.

Dis-Chem acknowledged that trade in March was higher than it expected – the company says it is trying to negotiate a “fair rental” with landlords. It has in some cases not paid rent to landlords for April, while in other instances it has paid a portion of the rent, but not the full amount.

Estienne de Klerk, chair of the SA Reit Association said that as a result of the lockdown, rental collections for the retail property sector were low, standing at between 30% and 40%.

Malls in South African are facing crippling losses as non-trading retailers, including The Foschini Group, Pepkor and KFC’s owner, Yum Brands, halted rental payments during the national lockdown. Compared to Dis-Chem, this at least has some merit.

In our view tenants should negotiate a win-win stand-still arrangement that benefits both parties.

The attitude of the Dis-Chem management and board smacks of opportunism and arrogance. They should pay their full contractual rentals. Their clients are no fools. The media coverage given to this unacceptable behaviour could easily lead to buyers voting with their feet, which will hurt the business and its share price.