Sun Hung Kai, LKF Group fulfil 'social responsibilities', cut rents in response to call by Paul Chan

By
Martin Choi
,
Enoch Yiu martin.choi@scmp.com
/ https://www.scmp.com/business/article/3050309/sun-hung-kai-lkf-group-fulfil-social-responsibilities-cut-rents-response?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp
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February 18, 2020 2:39 PM SGT
Sun Hung Kai Properties, Hong Kong's biggest developer by market value, Lan Kwai Fong Group, the biggest bar and restaurants landlord in the city's Central district, as well as New World Development have cut rents in response to a call by Paul Chan Mo-po asking for property owners to "fulfil their social responsibilities".
Sun Hung Kai said it would cut base rents at its shopping centres by up to 50 per cent in February, as an outbreak of Covid-19, the newly named disease caused by the coronavirus, continues to weigh on a range of industries in the city.
The developer said it hoped the relief measures would stabilise the economy and protect employment. "The group is particularly concerned about the catering industry, which employs a large number of frontline employees, and hopes that the relief measures will help reduce their operating pressure," it said in a statement.
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The relief measures come in response to a call by Chan, Hong Kong's Financial Secretary, who called on mall owners to cut rents in a blog post on Sunday. "I reiterate my appeal to property owners to tide over difficult times together and fulfil their social responsibilities by providing more substantial rent reductions for tenants whose business is in distress," he said in his post.
It is common practice in Hong Kong for shopping centre operators to charge a base rent that becomes the turnover rent if sales exceed an agreed threshold. SHKP owns 12 million sq ft of retail space across 24 shopping malls in the city, including the IFC Mall in Central, New Town Plaza in Sha Tin and Yoho Mall in Yuen Long.
The developer acknowledged that the outbreak had affected its property sales and hotel occupation rates to varying degrees.
Elsewhere, Allan Zeman, the chairman of LKF Group, said in an interview that he had waived rents on a case-by-case basis.
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"It is a challenging time. I have cut rents for well-managed companies that are facing difficulties amid the epidemic. We can only hope the virus goes away soon," he said, without giving details of the rent reductions.
New World Development said it too would cut February rents to alleviate the pressure on merchants. The reductions will be made on a case-by-case basis, the developer said in a statement.
"I believe more property developers will follow suit. It's a charitable deed and a way to give back to society," said Louis Chan Wing-kit, vice-chairman for Asia-Pacific at Centaline Property Agency. "Bigger developers with greater financial capabilities will take the lead to help smaller tenants. But business is business. All developers and landlords have been hurt by the epidemic. Some smaller landlords might have taken a greater hit from the epidemic than their tenants," he added.
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"Under the current circumstances, I believe more developers will brave through these trying times with their tenants. This is a good thing," said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty.
"If bigger developers lead the way, I believe more landlords will follow suit. The period of the rent cut will depend on the situation of the coronavirus outbreak and how big its impact is," he said.
The Real Estate Developers Association of Hong Kong said on Tuesday that its members were exploring ways of relieving the pressure on tenants in the retail and food and beverage sectors on a case-by-case basis, by offering rental concessions among other measures.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
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