Interest groups for tenants and landlords in the Netherlands have reached agreement on a general (non-binding) framework of guidelines for addressing the consequences of Coronavirus Disease 2019 (COVID-19) for the Dutch retail sector.
Earlier this month, the Ministry of Economic Affairs issued a warning that, if no deal would be made between the respective interest groups before 20 April 2020, the government might impose binding measures for the Dutch retail sector. Such binding measures for the real estate sector have already taken shape in other countries in Europe, such as the United Kingdom and Germany, consisting of for example the implementation of some form of grace period for the months April to June to protect tenants from termination or eviction by the landlord.
The general framework of guidelines provides a similar arrangement by allowing a partial suspension of rent payments for the months April to June for retailers that incur a drop of turnover of 25% or more due to the COVID-19 crisis. The suspension of rent payment relates to at least 50% of the rent, depending on the financial strength of the parties involved. Retailers with international presence are excluded from the above, but the framework assumes tailored measures under the condition that such tenants maintain a constructive attitude. The general framework and the consequences of the COVID-19 crisis will be evaluated by the interest groups in May to see whether further relief is needed by the retailers for the longer term.
The general framework for the retail sector provides guidance to landlords and retailers with respect to the tenant’s rent payment obligation, and may also provide an idea of what other guidance may work for other real estate classes.
* This GT Alert is limited to non-U.S. matters and law.
For more information and updates on the developing COVID-19 situation, visit GT’s Health Emergency Preparedness Task Force: Coronavirus Disease 2019.