Rwandan commercial tenants appeal for rent waiver

The fate of tenants operating business in different commercial buildings remains uncertain after their businesses were temporarily closed since March 21 when the government announced a lockdown to prevent the spread of coronavirus.

Their dilemma comes after the cabinet on Wednesday last week extended the lockdown to an additional two weeks until Sunday April 19 to further contain the outbreak.

As a result, the great majority of businesses are already struggling to pay their rent bills.

Fred Ndicunguye who own a fashion store at Champions Investment Company (CHIC) building says that paying rent for a business which has not been operational for two weeks would be 'unfair'

Every month he pays Rwf 700,000 in rent, in addition to Rwf 300,000 in wages for his one staff member.

"My business is suspended, we are spending our capital for daily living during the lockdown and I am supposed to pay my employee who is not working and yet the rent bill is waiting for me which is a serious concern not just for me but the whole business community," he said. "Something should be done to fix the issue because we don't really know what will happen."

His appeal comes weeks after Central Bank directed commercial banks to ease loan repayment conditions to distressed borrowers whose income has been severely affected by the COVID-19 pandemic.

The intervention comes at a time most sectors of the economy are set to suffer due to the virus outbreak, occasioning cash flow challenges for many.

For Ndincunguye, if banks are easing loan payment conditions for their borrowers, landlords and property owners should consider giving waivers to tenants.

"We haven't heard from landlords yet but I expect them to understand our situation," he suggested.

A trader who deals in electronics at the former Union Trade Centre (UTC) said he might be forced to relocate his business elsewhere if he is asked to continue paying the full amount of rent.

"My business is the only source of income that I have. So, I don't expect the landlord to come knocking looking for rent fees yet my business is closed. We are in a situation where landlords should understand us," he said.

However, property owners have remained silent on the matter, citing ongoing negotiations between banks and landlords to ease loan repayments.

The New Times has learned that the management of CHIC halted the invoicing of tenants for the month of April as they wait for the outcomes of negotiations with the banks on the loan repayment.

"You can't give rent invoices to tenants whose business are not operating and it is a situation we share in common. We told banks how the lockdown could affect rent which is the source of the money we use to pay bank loans" said Olivier Mazimpaka, the CHIC Managing Director.

Mazimpaka said they are monitoring the developments before announcing their decision.

"We can't say we will waive rent for a month as long as we aren't sure if the issues will last a month. If banks, for instance, decide to waive loans for a month, maybe we can also waive rent to tenants for a month," he said.

Meanwhile, three tenants operating their businesses at Kigali Business Centre (KBC) have written to management on matters related to rent during the lockdown.

There are 15000 square metres for rent at the building occupied by over 50 tenants. The rent cost for a square metre varies between $25 and $30.

David Mporanyi, the KBC Managing Director, said they are in talks with banks regarding loan repayments and an official communique to all tenants will be released soon.

"We put ourselves in tenants' feet and understand their concerns but we are pretty confident the communique will be fair for both of us. Neither of us (tenants and property owners) is to blame for the crisis because it has affected every sector and this is why we are looking for ways to address it responsibly," he said.

There is also fear that some tenants could eventually leave commercial buildings.

This, observers say, would be a setback to the real estate business.

Moreover, Mporanyi said they are open to discussions with tenants.

"We don't expect our clients to leave because we are flexible and ready to hear our tenants and see if we can facilitate them in terms of rent payments instead of losing them," he said.

Call for government interventions

The real estate sector is at a risk of losing billions of francs if businesses activity in the country continues to plunge.

Charles Haba, the CEO of Century Real Estate, says the relationship between tenants and landlords cannot suffice in this kind of situation, saying that the government should provide a very clear direction for the issue.

"Every business relationship is governed by a contract but the current issue is beyond landlords and tenants' relationships. The government has a very big role to play in this and has to pronounce itself and provide a clear solution to this to avoid disputes between landlords and tenants," Haba said.