Polish shopping center owners feel the pinch as lockdown continues
As Poland extends the lockdown, keeping malls closed, the Polish Council of Malls is calling for a more equitable form of support, which has so far focused only on tenants.
The losses of Polish shopping center owners will increase by an additional 200 million złoty (44.05 million euros), according to Krzysztof Poznański, head of the Polish Council of Shopping Centers (PRCH), referring to the government’s decision to expand the nine-day restrictions until April 18.
The estimated value of the industry’s total debt now stands at Zł90 billion and some owners are about to leave Poland, he adds. Out of 570 shopping centers in Poland, 300 are owned by Polish capital.
PRCH is a non-profit association that brings together more than 200 companies operating in the retail and space services sector. About 70 percent of the commercial space in Polish shopping centers is in the hands of PRCH members.
In A declaration posted on April 7 on the official website of the Polish government, it was announced that the restrictions would be extended until April 18; closed are shopping malls, hair and beauty salons, accommodation facilities and gymnasiums.
Prime Minister Mateusz Morawiecki said on April 1 that the government’s plan was to provide additional support to tenants during the lockdown period. The government has proposed a new form of aid for businesses and service premises: an 80 percent rent reduction during the foreclosure and a 50 percent reduction for three months after it.
However, Mr Poznański says it is “asymmetrical and illegal”.
He adds that since the lockdown began in March 2020, more than Złoty 5.5 billion has been spent to support tenants on the budgets of shopping center owners and managers, which is roughly half of their annual income.
“Despite prolonged lockdowns, landlords are still deprived of any state aid, which would compensate for the privileged position of some of the market players – tenants, compared to others,” says Poznański.
He adds that commercial real estate is 70-80% financed by bank loans, and leases provide collateral for the repayment of loan obligations.
“The estimated value of the indebtedness of the industry is 90 billion złoty, and the annual cost of interest on the contracted debt reaches 3.2 billion złoty. Reducing the total value of leases, even by 10-20%, leads to landlord insolvency and, consequently, problems for the financial sector, ”he says.
‘Support the whole industry’
“As an industry, we consistently recommend supporting the entire retail business by creating a mechanism based on tenant subsidies to cover fixed costs, including rents – in line with good experiences from other countries. Europeans – so that they can settle their debts to the owners. This solution allows them to maintain the liquidity and stability of tenants, landlords and the financial sector, ”the PRCH added in a statement.
Mr. Poznański said that “we would like the government not to interfere in civic contracts between landlords and tenants. We believe that some support is needed for tenants, but it has to be a fair share with landlords.
According to Poznański, the PRCH had not yet received any contact from the government to discuss the issue.
Poland recorded 768 coronavirus-related deaths on April 9, following a record 954 deaths the day before.
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