Real Estate – Recent Developments Mall developers, tenants consider rent renegotiation
With the current economic crisis creating challenges for all sectors of the economy, the country’ s rapidly growing retail sector is struggling. Apart from a few malls, most retail facilities in the country were funded by private equity firms that got their funding mainly from foreign sources; and by virtue of this, they are currently facing a lot of challenges as many of their tenants who sell mostly foreign products, are finding it difficult to stock up or fit out in new malls due to forex scarcity. Findings by our correspondent indicate that many tenants are no longer paying rents in some of the big and expensive malls, because the rents are high due to the naira to dollar exchange rate, and most of the retailers don’ t have enough liquidity to stock up due to the forex restrictions, high costs and problems associated with importation. According to a source, who did not want to be quoted, some tenants owe as much as 15 months’ rent and developers cannot ask them to vacate the malls as empty shops in a mall is an indication of a failed project. Our correspondent gathered that the landlords were becoming more creative to keep their tenants in business and the malls functioning. Read more...