Briefs

The government announced additional rental waiver for tenants who are small and medium sized enterprises (SMEs), particularly those who have seen revenue drop at least 35% for the months of April and May. “The extra rental waiver is a much needed boost to tenants who have been severely affected by the extended circuit breaker, especially for retail and F&B tenants who are still unable to operate,” says Christine Li, Cushman & Wakefield head of research for Singapore and Southeast Asia.

Li also adds that many businesses are already struggling and downsizing even when their revenue drop may be less than 35%. “They could be the ones falling through the cracks,” she adds.

The additional rental waiver of two months for commercial properties and one month for industrial and office properties is to be borne by the landlords, according to the Ministry of Law in a release on June 3. This is on top of the mandatory two months’ rental waiver funded by the government in the form of cash grants and the 100% property tax rebate announced in the supplementary budget in March.

However, the government is also providing some relief for individual and SME landlords who do not have the means to provide tenants with the additional rental waiver. On June 3, the Ministry of Law introduced a package of measures to support landlords who may face cash flow constraints as a result of the rental relief measures. These measures will be tabled in Parliament under the Covid-19 (Temporary Measures) (Amendment) Bill on June 5.

They will also complement other measures announced by the Ministry of Finance (MOF), Monetary Authority of Singapore (MAS) and the financial industry in April. In this new package, landlords will be able to defer both principal and interest repayments on their mortgages up to Dec 31, 2020. This applies to those who are required to provide rental waiver or rescheduling of rental payment under the Covid-19 Amendment Bill.

Under the temporary relief measures announced in April, SME landlords could already apply to defer principal repayments on their commercial and industrial property loans. Most of the applications received so far have been approved, according to the MOF.

Landlords who face financial hardship or cash flow difficulties could apply for a reduction in rental waivers of up to one month for commercial properties and half a month for industrial and office properties. In such cases, interest will accrue only on the principal amount deferred, and no interest will be charged on the deferred interest payments.

To ease monthly instalment payments, individual landlords could opt to extend their loan tenure up to Dec 31, 2020, without having their credit scores impaired. However, there will be additional interest costs which they have to take into consideration.

Those who need additional credit to meet their immediate cash flow needs can apply for a loan under the Enterprise Singapore (ESG) Temporary Bridging Loan programme, or Working Capital Loan Scheme through their banks and financial institutions.

Bugis Cube chairman Henry Mok, who represents the strata commercial landlords in the building, says that many of the strata landlords are either self-employed or retirees. Hence, they rely on the rental income for their livelihood. The additional rental waiver will put them “in dire straits”, he adds.

“Strata commercial landlords have not fully benefited from government aid,” adds Mok. “The banks have not passed on the lower borrowing costs to the strata commercial landlords. There is no change in the banks’ board rates and contractual obligations still remain.”

Larger corporate landlords including Singapore-listed real estate investment trusts (REITs) could also approach their banks or finance companies to explore funding solutions to meet their cash flow needs. Some have already requested for payment deferrals or temporary loan covenant waivers, which banks have acceded to.

Industrial REITs have mentioned that their proportion of SME tenants range from 20% to 55%, while retail and commercial REITs are examining their tenant lists to see who qualifies for rebates. Among the industrial REITs, Mapletree Industrial Trust has the largest proportion of SME tenants at around 55% of its portfolio. Ascendas REIT and Mapletree Logistics Trust’s SME tenants range from 20% to 25% of their portfolios. Credit Suisse estimates that the impact on distributions per unit from the new bill is likely to be modest, at less than 2% of DPU.

Banks have also given assurance that there will be “no automatic enforcement of loan covenant breaches” with landlords who are affected by the constraints imposed by the Bill.

“The relief measures will actually give all stakeholders including landlords, creditors or banks, and tenants a circuit breaker of up to end December this year to fulfil their obligations to each other,” notes Li.

“Given that the V-shape recovery is very unlikely at this juncture, the relief measures could do little to help with the businesses — both landlords and SME tenants beyond the short-term,” she adds. “It’s just kicking the problem down the road.” — Cecilia Chow

UK to change immigration rules for Hong Kong citizens if China passes law

British prime minister said he will change its immigration rules and offer millions of Hong Kongers “a route to citizenship” if China imposes new security laws, as he would “have no choice” but to uphold its ties with its former colony. Johnson, writing in the Times newspaper, said that if China passes the law, Hong Kongers holding British National (Overseas) (BNO) passports will be allowed to come to the UK for 12 months without a visa — up from six months now. Some 350,000 people in Hong Kong now hold a BNO passport, while another 2.6 million others are also eligible. They will also be given further immigration rights, including the right to work, leading to eventual citizenship.

Government to build 11 new dorms in the next few years

Singapore is looking to set up 60,000 additional bed spaces for migrant workers by the end of the year, with another 100,000 to be completed in the next few years. This is part of the government’s push to reduce the density of migrant worker dormitories and to make them more resilient to public health risks such as pandemics, National Development Minister Lawrence Wong said June 1.

Presently, some migrant workers who recovered from the coronavirus are being housed in floating hotels, military camps and vacant Housing Development Board (HDB) flats as a stop gap measure.

About 11 such purpose-built dormitories (PBDs) are slated to be up and running in the next two years. This may mean that the dormitories could be set up to residential areas. This was a concern that surfaced in 2008, when residents of Serangoon Gardens petitioned against the proposed housing of migrant workers in their precinct.

“I would say that Singaporeans have to do our part as well, because in land-scarce Singapore, it is inevitable that some of these new dorm sites will be quite near residential areas, so all of us must do our part by rejecting the Not-In-My-Backyard mindset,” said Wong.

“We really need to appreciate the contributions of all that our migrant workers have been doing and we welcome them as part of our community. And this is an important part of how we can also learn from this whole experience and become a more inclusive society,” he added. — Amala Balakrishner