Exclusive | Hong Kong retail landlord Chinachem cuts base rent close to zero for tenants in Tsim Sha Tsui to ‘walk them through this tough period’

Chinachem Group is charging close to zero base rents as part of relief measures offered to some of its tenants in its Tsim Sha Tsui shopping centres since March.

Donald Choi, the Hong Kong retail landlord’s chief executive, said in an interview on the sidelines of the China Conference, which the South China Morning Post is hosting, on Thursday that tenants selling duty-free products targeted mainly at mainland Chinese tourists have been offered the favourable terms to power through the city’s worst ever economic recession on record.

“These shops were close to shutting down, as most of their customers are from mainland China. We would like to walk them through this tough period. We will look at turnover rent as compensation when their business comes back,” he said, adding that such measures were in place at least until the end of June. Turnover rent is the amount of a tenant’s revenue that its landlord gets over and above the base rent.

Chinachem operates 7.5 million sq ft of investment property in the city. It has two commercial buildings with retail space in Tsim Sha Tsui – Chinachem Golden Plaza and Chinachem Cameron Centre. Choi said 90 per cent of tenants in these shopping centres had received rent relief that ranged from 20 per cent to 50 per cent. About five tenants will pay close to zero base rent. “We are looking at it case by case, and it is not fair to have one solution for everybody, as some industries are in a nosedive,” he said.

“What’s more important is that we do not only help tenants cut costs, but also help them do their own business and improve revenue,” Ada Wong of Champion Real Estate Investment Trust, said during a panel discussion held during the conference.