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Indian retailers urge landlords to adopt revenue-sharing rent model

High-profile Indian retailers are lobbying mall owners to transition to a revenue-sharing rent model in the wake of the coronavirus pandemic.

Times of India reports that the companies, including Future Group, Aditya Birla, Arvind, Raymond and Litebite Foods, believe moving to a revenue-share model from fixed or minimum guaranteed rentals is critical to the survival of the industry. The retailers are seeking for the revenue model to be calculated from March 1.

A letter to mall owners signed by around 75 retails firms operating 200 brands proposed a flat revenue share percentage based on tenant categories. The letter suggests regular brands could contribute 10–12 per cent of takings, including common area maintenance, while fast-food brands could contribute 7–8 per cent.

“Our objective is to ensure that all businesses in the retail industry are able to survive this pandemic and its aftermath and thereby sustain 6 million jobs that this industry generates,” read the letter. “For that it is critical that mall owners and tenants (brands and retailers) are able to arrive at a mutually agreeable arrangement on rentals, not only for the period of shutdown but also thereafter till normalcy returns.”

The report suggests large mall owners remain undecided on the issue of whether rent waivers or revenue sharing models are the more appropriate response to the impact on business of the coronavirus pandemic.

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