Greene King offers rent cut of 90% to support tenants for restart

By Ed Bedington

- Last updated on GMT

Related tags: Greene king, Coronavirus

Greene King tenants are set to benefit from a 90% rent reduction in the face of the ongoing coronavirus crisis, with further tapered support as a business restart gets under way, the company has announced.

The company said the rent concession, which will leave operators only paying 10% of rent until they can legally reopen, would also continue at 90% for the first four weeks after reopening, and then continue at 50% for the following four weeks.

On top of this, the company said tied tenants would also receive eight weeks of trade support when buying barrels of beer and cider from them upon reopening, which will see discounts of between £86.40 a barrel for four weeks, tapering to £57.60 a barrel for the next four weeks.

The company had also pledged to replace all unopened kegs and casks in tenants’ cellars that will be out of date when it comes to reopening. A survey of tenants has revealed the total cost of this support will be approximately £1.3m plus VAT.

The move also follows previous financial support from the company, which it said had seen it offer around £4m of rent concessions to tenants during the initial 12-week shutdown.

“What we’re offering our licensees is effectively support up to the end of August and beginning of September,” said Wayne Shurvinton, managing director of Greene King Pub Partners. “It's a strong message to send to our licensees, not only were we supportive during the closure period but, crucially, how we can support when pubs reopen.”

Fighting chance

He said they recognised with social distancing the likely guidelines to be imposed on the sector that pubs “would not be trading at pre-Covid levels” but felt the concessions they were offering were fair for licensees and gave them a “fighting chance” when they come out the other side.

He said if the reopening date from the Government changed, then Greene King would hold the support for longer: “[For example], if the Government says pubs can reopen on 4 August, our commitment is to hold at the 90% rent credit.”

He admitted there could be challenges for some pubs to reopen, but said that its modelling suggests that if it’s safe to open “based on a 90% and 50% rent credit, the vast majority of licensees should be able to open”, but said that if there were any exceptions of sites that were unable to open, Greene King would have one-to-one conversations with those operators.

He added: “From the outset, balancing as much support for our tenants as we possibly could alongside ensuring the long-term survival of Greene King has been our priority.

“By deferring rents before pubs were ordered to close, we removed any immediate cash-flow concerns for our partners and, since then, have reassured them that we would support them in every way possible when it came to rent and I’m very pleased to announce these latest measures today.

“None of us are immune to the financial implications of pubs closing and we all have to work together to survive this existential threat to our industry. I’m grateful to every single one of our tenants who has worked with us and trusted that we were doing all we could to look after them.

“We feel we’ve played our part and it is critical the Government continues to play its part in supporting our sector. The support so far is extremely welcome but, as a tenant ourselves with over 500 landlords, we have not received rent concessions in the way we are offering them to our tenants and further support on rent payments is needed to support the recovery of the pubs sector.”

For more on the support and Shurvinton’s thoughts on the challenges of pubs reopening, watch the video above.

Related topics: Greene King

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