Business

Bedrock offers to waive tenants' rent for 7 percent of gross sales

May 28, 2020, 6:50 AM

Tenants in Dan Gilbert's commercial real-estate empire are offered a unique deal as part of "Bedrock Relaunch," the plan to get dozens of stores and restaurants up and running again: No rent, but 7 percent of gross sales through the end of the year. 

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Matt Cullen: "We want to make sure that rent barriers aren't a barrier to success."

The Detroit News reports

Restrictions are beginning to ease, but it could be a slow ramp-up for retailers and restaurants that are limited by capacity restrictions and face an economic downturn that may depress consumer demand.

"It is becoming clear that even when all businesses are able to reopen, it's unlikely their sales volume will immediately return to pre-pandemic levels, and we want to make sure that rent barriers aren't a barrier to success," Bedrock CEO Matt Cullen said.

Besides the new arrangement, those same tenants also had rent 100 percent forgiven for April, May and June. 

Cullen described the proposal as "pragmatic," because if tenants could not pay rent for the remainder of the year, the company would have to bear the expense of a vacant space until a new one could be found. Landlords and tenants have a "symbiotic" relationship, he said. As for the figure:

Bedrock arrived at the 7% rate, Cullen said, because it's a general rule-of-thumb that tenants can afford to spend about that much of their gross sales revenue on rent. But rent rates from before the shutdown may not be affordable for businesses that are reopening to a very different set of business conditions. Michigan retailers, for example, can reopen this week, but by appointment only and with no more than 10 people in stores at a time.


Read more:  The Detroit News


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