The interim authorisation was granted following an application by the Shopping Centre Council of Australia Limited (SCCA) and Scentre Group, which owns and operates 42 Westfield malls in Australia and New Zealand.
Members of the SCCA – including Scentre Group, Mirvac, Stockland, AMP Capital, and Lendlease, among others – will be allowed to jointly develop a plan to assist small business tenants, including franchisees and licensees, with a turnover of less than $50 million per year. Possible relief measures could include deferred or reduced rental payments, interest payment waivers, or extended leases.
Rod Sims, chairman ACCC, said, “Support for small and medium businesses in this difficult time will help the economy start up again when the pandemic has subsided. We are allowing shopping centre owners to work together to come up with a plan to support their tenants experiencing financial difficulties.
“Nothing in the proposal stops individual owners from offering more generous concessions to their tenants.”
Shopping centre landlords must notify the ACCC of any rent relief measures agreed to 24 hours before the measures take effect, and these measures will be published on the ACCC’s authorisations register.
The ACCC can object to any proposed agreements and revoke the interim authorisation at any time.
Read ACCC's full Interim Authorisation Decision PDF »
Government requests landlord 'code of conduct'
The decision came after Prime Minister Scott Morrison called for commercial landlords to adopt a mandatory 'code of conduct', to be enforced by state and federal governments.
Morrison said the code should contain a “proportionality principle”, meaning the rent reduction should equal the reduction in turnover experienced by the tenant.
“These arrangements are designed to address the small and medium-sized tenancies,” Morrison said, adding that “larger retailers and big landlords” could carry out separate negotiations.
“We would like, as a National Cabinet, for it to be done by industry and for them to finalise a code with the proportionality principle as quickly as possible so it can be adopted into state and territory regulation as a matter of mandatory arrangement,” he added.
Peter Allen, CEO Scentre Group, said, “We all accept that retail leases are legal obligations and enshrined in the laws of the states and territories, yet we are also commercial people and we understand there needs to be many factors taken into consideration as we come to an agreement on temporary arrangements.
“Our aim is, in a proportionate and measured way, to share the financial risk and cashflow impact during the COVID-19 [pandemic] with the interests of all our stakeholders.”
Meanwhile, analysts have predicted that major retail landlords will face rental declines of up to 20 per cent once the pandemic subsides – and 30 per cent for the next six months.
Grant McCasker, real estate analyst UBS, predicted that 63 per cent of tenants of Vicinity Centres – which owns Sydney’s Chatswood Chase shopping centre and co-owns Melbourne’s Chadstone – would receive a rent abatement of 50 per cent for the June and September quarters, leading to a revenue reduction of 30 per cent per quarter for the landlord.
He assessed similar numbers for Scentre Group.
However, McCasker forecast that rents would fall by 2 per cent in the long-term, which would “allow for growth to re-emerge” and significantly reduce occupancy costs.
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Federal government announces more support for small businesses