The company, which initially cancelled rents for a six-week period immediately after the lockdown announcement, has now written to tenants to set out its plan to navigate a way through the crisis that would enable it to continue to offer long-term support to tenants when the country reopens, according to chief executive Chris Jowsey.
The company is proposing that for tenants who are receiving no grant monies – those above the £51,000 rateable value threshold – will pay no rent for or other charges for May and June.
For pubs receiving a £10,000 grant, Admiral is asking for a rent contribution that will be capped at £1,500 a month (inclusive of VAT), for May and June.
Jowsey said: “We’ll be taking £3,000 out of that grant, which leaves the operator £7,000 for remaining fixed costs and living expenses.”
He also stressed that for any operator paying a rent over the cap, the excess would not be deferred, but cancelled, stating: “We want operators coming out of this motivated and energised, not feeling overburdened with debt.”
He said for operators getting the £25,000 grants, which is about 250 of Admiral’s tenants, the pubco would be charging rent and associated charges but stressed operators would still be “left with the majority of the grant in their hands at the end of June”.
He also stressed that if an operator was due a grant but had not been able to physically attain the money, they would be deferring collection until the cash arrived. At the time of writing, he estimated around 40% of his estate had been able to access grants.
Admiral had been roundly praised for its initial reaction to the crisis, cancelling rents until the end of April but Jowsey points out the business has only finite resources, and that he had to balance the needs of the moment against the needs of the business to be able to continue to support tenants during the difficult reopening period.
He said: “The 20th of March was a shock to everybody’s system but we made a proactive decision to support licensees. Nobody knew what would happen but we were keen to get cash into the hands of licensees.
“Everyone had had a total loss of income, ourselves included, but the decision to support tenants bought some time for the Chancellor to be able to step in with support.”
He said those moves were very welcome. “The grants made a massive difference. They are a life-saver and the furlough scheme is fantastic.”
Variety of feedback
However, he said the Chancellor was very clear about the use of the grants – for fixed costs including rent and staff.
“We want to be up front about what we’re doing,” he added. “We’ve not done this blindly, we’ve talked to a lot of licensees and we’ve had a variety of feedback but, generally, this feels affordable and reasonable.
“I need to balance the needs of short-term relief of rent and the long-term requirement to support businesses for their longer term survival. They’ll need help to reopen and all sorts of support in the initial months of trading when trade is likely to be lower than pre-Covid levels.”
He stressed Admiral had done everything it could to cut costs to the bone, with 75% of staff furloughed, and remaining members of the team volunteering for pay cuts. In his own case, he said he had taken a 50% pay cut and he was not alone in that.
He acknowledged the decision to resume a degree of rent collection would not necessarily be greeted with cheers, but added: “I know that we’ll never satisfy everybody and I’m not trying to do that. We’re just trying to strike a balance between the short-term and long-term needs.
“Will we get a kick back from campaigners? I’m sure we will. But this is affordable and reasonable. I hope those campaigners will recognise that we acted quickly and were clear and decisive in those early stages but they must also acknowledge what those grants were made for.”