X Madrid Shopping Centre owned by Merlin Properties
The Spanish REIT’s tenants will benefit from partial discounts in their rents until the end of the year, but will, in exchange, have to extend their occupancy contracts until 2022. This measure was accepted by 90% of the tenants who occupy the company’s 18 shopping centres, out of a maximum eligible universe of 94%.
According to Ismael Clemente, the REIT’s CEO, this decision was taken so that «our asset managers have the whole of 2021 to make the necessary re-leasing exercises to replace leaving tenants. We want our managers to be focused on that and not to worry about regular lease renewals which would only come into effect in 2022», he added.
This measure consists in a gradually decreasing discount on the rents which will start at 60% in June and finish at 10% in December, at a time when tenants should already be «normalising their activity», he predicted. These discounts extend not only to «companies which, due to mandatory regulation, had to close their businesses but also to those companies which saw their activity severely limited, provided their contractual obligations are up to date», advanced the CEO from Merlin Properties, during the shareholders’ general meeting which took place this Wednesday, quoted by El Economista.
Besides the extension of the contracts until 2022, the REIT’s tenants should keep paying the common expenses and renounce taking any legal actions against the company.
This was not the only measure adopted by the REIT to face the pandemic. Amongst the implemented measures, are the 450 million euro reduction in investment for 2020, the 25% cut on the board’s salaries and the 81 million euro cash inflow due to the cancellation of dividends, recalled newspaper Expansión. One of the frozen projects is the 20 million euro full refurbishment of the Madrid Fnac building in Plaza Callao, which will be converted into a shopping centre, according to press agency Europa Press.
Operación Chamartín «fits like a glove»
On Operación Chamartín on which Merlin Properties is now present, Ismael Clemente assumed that it «fits like a glove» on the REIT’s business strategy, not only for the type of assets involved in the project but also for its execution calendar.
The REIT became the second-largest shareholder of the urban project last year when it purchased a 14.46% share of said project from developer Distrito Castellana Norte which owns it. Amongst the remaining shareholders are BBVA and group San José.
