Update COVID-19: The Easter agreement summarized
On Friday 10 April 2020, representatives of landlords and tenants in the retail sector in the Netherlands (IVBN, INretail, Vastgoed belang, Detailhandel Nederland and VGO), the Ministry of Economic Affairs and Climate Policy and the members of the Commercial Real Estate Committee of the Dutch Banking Association (ABN AMRO, ING, Rabobank and Deutsche Bank) have agreed upon a package of (support) measures to divide the economic consequences of the Corona crisis as equally as possible between the parties involved, such as retailers (and their shareholders), landlords, banks and the government.
This so-called Easter agreement (Paasakkoord) is intended to provide the parties involved (short-term) points of references with respect to tailor-made solutions per retailer, per landlord and/or per location.
The entire Easter agreement can be read here.
Below we have summarized the main arrangements of the Easter agreement:
- Retailers are entitled to a rent suspension of three months as of April 2020, provided that the retailer can demonstrate a loss of turnover of at least 25% in April – May – June as a result of the Corona crisis. As starting principle, the loss of turnover is determined on the basis of offline turnover. Online turnover and its importance on the (total) turnover is a component of a tailored agreement.
Note: To enable a landlord to assess the decline in turnover, the tenant must provide the landlord with information that is complete, transparent and verifiable;
- The rent suspension amounts to at least 50% and can – if and as far as possible for the landlord – amount to, for example, 75% or even 100% (taking into account proportionality in size and capacity of the landlord);
- Due to complexity, a tailored approach is required for (i) international retailers, (ii) retailers with branches and formulas abroad and (iii) retailers with an international shareholder. The basic principle is that tailor-made agreements will only be entered into provided the retailer acts constructively;
- During this (suspension)term, the landlords (and financiers) will not exercise their right to claim eviction or bank guarantees and/or parent guarantees (unless this is necessary in order to protect their interests).
The Easter agreement assumes a cooperative attitude on the part of the retailers. This does not only apply to the information to be provided by the retailers regarding the loss of turnover (which must be complete and verifiable). In addition, the retailers are expected to make a maximum effort – within the guidelines set by the government, of course – to bring about the timely and safe (re)opening of their stores. In addition, the Easter agreement assumes that retailers will refrain from unilateral payment arrangements and that – as far as possible – they will continue to fulfill rent payments.
The above measures are intended as a temporary solution for the short term. At the end of May an evaluation will take place in which possible follow-up arrangements for the long term will be made and/or will be worked out in more detail. As a long-term solution, a possible waiver of the retailer’s payment obligations can be considered if the actual impact is clear after 3 months. At the moment, however, it is too early to draw conclusions in this regard.
Should you have any questions in the meantime, please contact our tenancy law team.
