Landlords Under Financial Pressure Are In The ‘Same Boat’ As Tenants
HALIFAX – There’s been a lot of pressure on landlords during the COVID-19 pandemic to defer rent owed to them by tenants. Those who don’t often find themselves criticized by the public as greedy and heartless. But one Halifax property manager, who operates eight buildings with a total of 70 commercial tenants, is reminding people that landlords are under financial pressure as well.
“There’s a lot of uncertainty; a lot of anxiety on behalf of tenants and landlords,” said Marilisa Benigno, Vice President of Alessandra Investments Limited. “I see us as being pretty much in the same boat. We both have bills and deadlines to pay those bills.”
“I think there’s been a lot of misinformation out there about landlords getting mortgage relief and not giving it to their tenants. That’s completely false.”
Benigno says her company, which owns such buildings as the Garrison Place in Halifax, has mortgages to pay. So far, convincing the banks to defer mortgages has been a tough sell, and Benigno couldn’t get any payment deferred for the month of April.
“There’s no 100 percent deferment; they will defer a portion of your mortgage if you can show them that your revenue is significantly being impacted,” she said.
“April was a complete ‘no.’ We had to pay every single one of our mortgages and have had to pay all our bills.”
Although negotiating hasn’t been fruitful yet, Benigno doesn’t want to vilify the banks. She believes they are being fair under the circumstances and understands it’s not easy for a bank to simply defer everyone’s mortgage payments.
Despite the difficulties with mortgage payments, Benigno claims she was able to work with all her residential and commercial tenants who needed some type of payment plan for future rent payments.
The vast majority were able to pay all of April, but May and June remain financially unclear for many tenants, especially small business owners who are struggling right now. Benigno calculated that 54 percent of commercial tenants asked for some type of deferment.
“We have amazing tenants and we’re on good terms and good communication with all the tenants,” she said.
The Nova Scotia government tried to encourage landlords to defer commercial rent payments by offering to compensate them for losses. The program does not, however, offer direct help to the tenants, who would still have to pay off the deferred rent at some point during the lease.
Benigno says she negotiated payment plans with her tenants without using Nova Scotia’s rent deferral program. As many others have done, Benigno criticized the program for just adding on more debt to the tenants.
“It doesn’t help the tenant because it makes them rack up more debt that they’ll have to pay off… and that’s a lot of money for a lot of small businesses,” she said.
“Most of our tenants are in agreement with that.”
For landlords and tenants to get true relief from the mounting bills, Benigno believes it must trickle down from the very top, in the form of mortgage relief.
“It needs to come from the top down. Landlords are not at the top, government and banks are at the top. If I get mortgage relief or direct bill relief, I will pass that on to the tenants.”
Paul MacKinnon, CEO of the Downtown Halifax Business Association, has heard from both commercial tenants and landlords about the province’s rent deferral program. He said while some people like the program, others see major flaws.
One of the biggest problems, says MacKinnon, is the program only covers businesses that were forced to close by government mandate. Other businesses, such as retail outlets, have seen major revenue drops, but will not qualify. The other major complaint is the one echoed by Benigno: it places a debt burden on the tenants.
“It’s really putting additional debt burden on those tenants … they don’t have to pay their rent right now, but they will still have to pay their rent over the course of their lease,” said MacKinnon.
“Tenants feel this is providing a nice guarantee, and backstopping landlords, which is great, but it’s not doing the same for the tenants, so the tenant perspective is that’s not fair.”