Redundancies And Government Handouts As Birmingham Developers Feel The Pandemic Pain
Hammerson, which is behind plans for 1.4M SF of workspace and 1,300 apartments at Birmingham's 7.5 acre Martineau Galleries site, said it has taken “steps to increase covenant headroom [and] improve liquidity.”
This includes approval for up to £300M under the government’s Covid Corporate Financing Facility, increasing maximum liquidity to £1.5B.
The retail landlord said that as at 29 June 2020, it had collected 73% of H1 2020 rent in the UK. “The company remains confident of material increases in Q2 and Q3 collection rates,” a regulatory statement said.
British Land, which owns the majority of the 174K SF Crown Wharf retail park in Walsall, as well as TGIF restaurants in Birmingham and Coventry, is also acting defensively, cutting director bonuses and studying its balance sheet.
Birmingham City Council has also revealed that it took a rental hit due to the pandemic. Council paperwork, published this week, showed that the decision to suspend the enforcement of commercial rent payments cost £1.1M in extra arrears in each quarter.
Even developers and landlords in sectors thought to be insulated from the worst of the pandemic after-shocks have taken a hit.
Birmingham-based industrial and residential developer St Modwen has made “selective redundancies”.
A statement by St Modwen interim chief executive Rob Hudson said that the business is eligible for the Government's Covid Corporate Financing Facility and his readied itself to lose most of its retail rent into 2021.
“We have taken a number of steps to manage our cost base, including the 20% voluntary reduction in board pay and fees previously announced, a reduction in all discretionary spend and bonuses, a temporary tapered reduction in pay for higher earners and selective redundancies,” Hudson said.
Interest in St Modwen’s industrial and logistics units remained healthy despite the pandemic. As a result, 2019 completions are now 74% let or under offer (compared to 58% in February, before the pandemic) and the 2020 pipeline is 53% let or under offer (compared to 18% in February), with around half of these new letting deals agreed during lockdown.
Non-core retail assets performed less well. St Modwen received 61% of the £4M rent due in March, April and May, which is appreciably above industry-wide averages.
St Modwen paused all capital expenditure at the start of the crisis. However, it has not joined the many property businesses taking advantage of government funds to furlough staff.
“Whilst most of our on-site activity had been paused during lockdown, we have continued to pay any employees on furlough their full entitled salaries and decided it would not be appropriate to use the Government's Coronavirus Job Retention Scheme,” Hudson said.