Apple asks UK landlords to cut rent by 50% and offer ‘rent-free period’ due to COVID-19

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Apple has allegedly asked its UK retail store owners to cut rent by 50%, according to a new report from Le Sunday Times. If landlords agree to reduce the rent and offer a “rent-free period,” Apple would be prepared to extend its leases for several years.The report explains that Apple would like its rent to match what is paid by other retailers amid the slowdown caused by the COVID-19 pandemic. In light of the COVID-19 halt and much lower foot traffic, many shopping center operators in the UK have offered discounted rents to their tenants. Simply put, mall operators are looking to get troubled tenants to honor their leases despite the economic downturn.

Apple’s pitch, according to today’s report, is that if landlords reduce the rent by 50% and offer a “rent-free period,” Apple will extend its leases for more years. Owners have a vested interest in keeping Apple with a tenant. Apple Stores consistently lead the way in retail profit per square foot, and the foot traffic generated by Apple Stores is beneficial to malls and other retailers.

The report explains:

The tech giant has told owners of part of its 38-store estate in the UK that it wants rents reduced by up to 50% and a rent-free period. In return, he offered to extend the leases by a few years.

Apple is looking to align its rents with those of other retailers, many of whom are benefiting from discounted offers as owners struggle to keep their malls occupied. The company’s proposals are said to be for stores with a multi-year lease, which means owners aren’t yet forced to make a decision. Apple declined to comment.

Ultimately, the report points out that owners don’t have to make a decision just yet, as Apple still has several years on most of its existing leases across the UK.

For the background, British shopping center operator Intu, which owns 17 shopping centers in the UK and two in Spain, recently filed for bankruptcy. Apple operates retail stores in several Intu-owned malls. Meanwhile, Apple just posted record third-quarter 2020 profits, with revenue of $ 59.7 billion and profit of $ 11.25 billion.

Apple operates 38 retail stores in the UK in total, and all 38 have reopened following closures caused by the COVID-19 pandemic. You can follow the process of reopening (and closing) the Apple Store in our guide.

Follow our guide to retail for in-depth coverage of the latest news from the Apple Store.

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