Whitbread PLC (LON:WTB) has asked its landlords to take a 50% rent cut over the next three months to help it weather the impact of COVID-19 restrictions on its hotels, pubs and restaurants.
In a letter to landlords, the Premier Inn and Beefeater owner said that “the pain” caused by the lockdown needed to be shared.
The group said it had seen significant net cash outflows in the first half of its financial year and need landlords to support it through a reduction in rent in the December quarter.
In September, Whitbread warned that 6,000 of its workers could be laid off while it has scrapped its dividend.
Almost all of Premier Inn’s 800- strong estate closed during the first lockdown with more than 27,000 staff furloughed under the Job Retention Scheme.
The letter was also sent before new Tier-4 restrictions were imposed on London and the south-east following the discovery of a new strain of coronavirus.
Property groups said that up until now Whitbread has continued to pay its rent in full, though in its letter teh FTSE 100 group said that it intended to make the reduction in its next quarterly rent due date of 25 December.
Andrew Jones, chief executive of LondonMetric, a Premier Inn landlord, told the BBC that while it would look to help with Whitbread’s cashflow situation until trading recovers there was no contractual provision for rent not be paid when things were tough.
“A permanent transfer of value from our shareholders to theirs is not appropriate for a company still valued at over £6bn,” he said.
Deferring rent payments for a period would be a fairer outcome, he added.
Commercial landlords are facing rent shortfalls of £4.5bn this year according to management consultancy Remit Consulting based and on an analysis of 125,000 leases.