ESRT ‘Will Aggressively Pursue’ Rent Collection From Tenants Who Can Pay
By Rebecca Baird-Remba April 24, 2020 3:56 pm
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Executives at Empire State Realty Trust, which owns the Empire State Building and several other commercial properties in Midtown, said on yesterday’s quarterly earnings call that they planned to “aggressively pursue collection of rent” for tenants that it believes can afford to pay their rent, based on their balance sheets.
The remark from ESRT Executive Vice President Tom Durels came after the commercial landlord revealed that a third of its retail and office tenants had asked for rent deferrals in April, some for as long as three months.
“Because candidly we’re surprised by some of those requests,” Durels told an analyst on the call. “So [when] there are tenants with good balance sheets that have the ability to pay the rent, we will pursue them.”
The rent deferrals and shortfalls come as the majority of New York City businesses have been forced to shutter since mid-March, when Gov. Andrew Cuomo ordered that only essential businesses can remain open in an effort to contain the coronavirus pandemic.
The real estate investment trust said that 170 retail and office tenants had requested rent deferrals, representing 32 percent of its annualized revenue. The company had been able to collect 73 percent of rents from office tenants and 46 percent of rents from retail tenants as of April 20.
So far, ESRT has struck deferral deals with only three tenants.
Tenants who seek deferrals from the company have to provide an explanation of how COVID-19 has impacted their business, steps taken to mitigate the financial impact, copy of an insurance claim for business interruption coverage and copies of applications for federal, state and local business assistance.
“We’ve seen tenants make deferral requests — tenants of all sizes, public companies, private companies and companies in various industries,” Durels explained on the call. “Clearly, there are certain industries that have been more severely and directly impacted by COVID-19, particularly, those with direct ties to retail, hospitality, travel and then even some of the advertising, consulting and legal firms that support those businesses. I will say that we have seen opportunistic requests by both office and retail tenants with good balance sheets and credit. We’re surprised by those requests and we will pursue aggressively collection of rent.”
