A number of big investors that made bets on the Italian retail sector in recent years have been forced to give tenants rent breaks and allow them to defer payments as a result of the coronavirus.

Italy was hit early and hard by the spread of the coronavirus, and the nearly 31,000 deaths in the country is the third highest total globally, behind the U.S. and UK.

The country has begun to gradually ease lockdown restrictions, with some shops allowed to open. But many shopping centres remain closed, and recent notices to investors that bought bonds secured against such assets give an insight into the challenges that retail property owners globally are facing.

The servicer to two loans totalling €233M ($253M, £206M) secured against Italian outlet centres owned by Blackstone last week said 64% of first-quarter rent obligations had been collected, compared to 98% in the first quarter of 2019.

The two assets are the Franciacorta Outlet Village, close to the city of Brescia in Lombardy, and the Palmanova Outlet Village, in the municipality of Aiello di Friuli, in the province of Udine. Combined they were valued at close to €350M when the loan was underwritten.

The nonpayment of rent equates to a €2.1M shortfall for the quarter, and the servicer pointed out that less rent is likely to be paid in June, because the lockdown was imposed relatively late in the last quarter.

Elsewhere, private equity firm Partners has been granted a series of modifications on a €110M loan secured against a portfolio of six small shopping centres spread across Italy.

According to the servicer of the loan, the borrower can now allow tenants to switch from quarterly payments to monthly for the second quarter of the year, and the payment for April to be deferred until the fourth quarter.

The centres are in Sicily and Puglia in the south of Italy, the capital Rome and Civitavecchia in the midlands, and Padua and Modena in the north, and were valued at €215M when the loan was underwritten.