98% rent collection for 2020
Rent collection has always been a steady part of the business at NSI. For the period 2016-2019 we collected over 99% of invoiced rents, with 0.8% of GRI written-off as doubtful debts. For 2020 rent collection was marginally down, at 98.0%, but still very respectable given the sudden and very disruptive impact of the coronavirus pandemic on our customers.
We recognised the problem early on and saw it confirmed in early April, when rent collection was starting to fall behind its usual pattern and we received numerous requests for rent relief from our tenants.
Requests for temporary leniency, such as monthly payments instead of quarterly payments, or rent payment at the end of the month instead of at the start were usually honoured. We have also selectively given rent relief in exchange for lease extensions, mostly to retail tenants.
During the year we have actively supported tenants with the following coronavirus pandemic-related initiatives:
- Rent waived for HNK flex customers. To support our customers we offered HNK flex tenants rent free for the months May, August (half month) and December. This equates to a circa 30% discount over the 9 month period since March. Cost: € 0.9 million.
- Rent restructured: We have decided to selectively provide some temporary relief to a subgroup of smaller tenants. Cost: € 0.1 million.
- Health & safety. We have decided to absorb all costs associated with the implementation of coronavirus-related measures in the common areas of our HNK and multi-tenanted office buildings. We also provided, at no cost, Plexiglas dividers between desks for our managed offices. These costs would normally be recharged back to tenants through the service charge. Cost: € 0.6 million.
The combined cost of these initiatives is € 1.6 million, or € 0.08 per share, which has negatively impacted EPRA EPS for 2020. We believe it is entirely appropriate as a long term investor with a strong balance sheet, a strong sense of partnership with our tenants and a wider social responsibility as a stock-exchange listed company to step up and provide support in what was a truly unprecedented year.
Low level of debtors at year-end
Due to an active focus on rent collection in recent years we started 2020 with only a minimal rent backlog. This, in combination with a very active dialogue with tenants during the year, has allowed us to finish 2020 again with a relatively low level of debtors.
The total level of debtors at year end is € 1.1million. This is offset by € 0.5 million in cumulative provisions, resulting in a net level of debtors at year-end of € 0.6 million. The comparable numbers for 2019 were € 1.3 million, € 0.7 million and € 0.5 million. As such this year the net level of debtors is up by only € 0.1 million.
Rent collection bridge full year 2020
In 2020 we sent out invoices for a total of € 104.6 million, including service charges and VAT. The overall collection rate is 98.0%, mostly because we waived € 1.1 million and we restructured € 0.5 million (often by way of a lease extension, in which the outstanding rent balance – all or in part – was converted into a lease incentive).
Rent collection outlook for 2021
Some of our tenants continue to be impacted by Government measures related to the coronavirus pandemic. We have received a small number of rent relief requests at the start of 2021. We will judge these on their merit individually and will update investors when appropriate.