The right of the entire business community to terminate lease agreements ahead of schedule without penalty charges will lead to large losses for owners of commercial real estate and for the banking industry, Sberbank CEO Herman Gref wrote in a letter to Deputy Prime Minister and Chief of Staff of the Russian Government Dmitry Grigorenko, made available to TASS on Thursday.
The subject matter concerns the bill on the right of businesses to unilaterally terminate a lease if the company’s revenue after the introduction of the quarantine has fallen by more than 50%.
“The measures proposed by the bill will lead to large-scale losses by commercial property owners without solving the industry’s problems in general, having created preferences for a number of players on the demand side of the shopping mall space. The combination of the above factors in a very short time will lead to financial insolvency of landlords and their inability to fulfill commitments,” Gref wrote.
According to him, the total loan portfolio of the industry is about 2.7 trillion rubles ($38 bln) and is secured by commercial real estate, the value of which due to the adoption of the bill will decrease by 20-30%, TASS writes.
If the bill passes, Gref proposes to extend it to tenants from the affected sectors of the economy, who really need the support.
“These enterprises primarily include small and medium-sized businesses that do not have a margin of safety and are in dire need of support,” wrote he, adding that a way to determine which organization needs financial assistance is to see if it belongs to the small or medium size business, or to look at the size of the rented space, which will allow to “reliably identify the target segment for support measures.”