Property Editor

TENANTS at the R1,4bn Gateway Theatre of Shopping in Umhlanga are fighting for a rent review.

About 30% of the tenants have banded to get Old Mutual Properties to cut their rents in light of low turnovers. They say they hope for an out of court settlement, but will take the matter to court if necessary.

The 62 tenants have employed Cape Town-based attorney Reid Corin to fight their battle with Old Mutual Properties. About 50 of them are in arrears amounting to about R3,1m. Some are paying rentals that equal half their turnovers.

Corin, who has been negotiating with Old Mutual Properties, says the tenants face a genuine problem. 'It is not like these tenants have used the money to buy expensive cars. The reality is that the money is just not there for them to meet their rental obligations at current revenue levels,' says Corin.

A number of other tenants not in Corin's group are said to have clinched deals with Old Mutual Properties that have reduced their rentals by up to 50%.

Gateway GM Mike Rodel says more than half the 62 tenants in Corin's group do not deserve a rental review because their turnover levels are well within general industrial norms. He says about 20 tenants do have issues to be addressed, and management is working on solutions for them, including moving them to smaller premises.

Rodel says management will consider genuine concerns, 'but we are not going to agree to rental reductions because some tenants have not reached their targets'.

He says most tenants at Gateway are doing well, and that the centre is well within its targets in terms of foot traffic and revenue.

Gateway's launch last October brought another 120000m² of retail space to an oversupplied market. It struggled to get national retailers to take up space, with a number, including Pick 'n Pay, Edgars, Foschini and Stuttafords, saying they were content with their representation at the Pavilion mall in Westville.

Corin says the tenants he represents include restaurateurs, small speciality stores and well-known national brands.

Tenants say that, after spending millions of rands preparing for Gateway's launch, they have been pushed into arrears because of low revenues. They also feel aggrieved that property managers give big national retailers lower rates and hope to offset these by charging higher rates to small-scale retailers.

They are, however, confident that the centre will improve in time. 'We need to be there when the centre comes of age,' says one tenant.