Britain's largest commercial landlord sees worsening prospect in rents in June

Land Securities, or Landsec, - which is Britain’s largest commercial landlord of offices and retail - said it expects collecting rents from its huge portfolio of offices and retail outlets in June will "likely be worse” than in March, just as the start of the Covid-19 storm.

The property firm has a huge concentration of offices, retail parks and hotels in the London region. Its shares which slid 12.5% in the latest session have now dropped a third of their value from May 2019.

“June rent collection rates are likely to be worse than March given that most of the negative economic impact from Covid-19 has fallen in the second quarter, notwithstanding the commendable scale and intent of the [UK] government’s economic response,” said its chief executive Mark Allan.

He said the property firm’s difficulties quickly started in the early weeks of the pandemic as Britain went into lockdown.

“The immediate impact of Covid-19 has been particularly significant on our retail and specialist segments,” Mr Allan said, with “only essential services like supermarkets and pharmacies remain open at our retail destinations, with four of our retail assets shut completely”.

“Although our Office segment has seen a less pronounced immediate impact, the vast majority of our customers’ employees are now working from home, with less than 10% usage of our office space,” he said.

“Rent collection rates in March and early April were impacted negatively across the portfolio with an average 63% collected within 10 days of falling due, compared with 94% for the same period in 2019,” he added.

And the outlook is uncertain.

Like all crises, the Covid-19 crisis will pass in time but its impact in the longer term, from both a societal and economic perspective, is likely to be profound.