Apple Asks UK Retail Landlords for 50% Rent Cut Despite Record Sales

[MacRumors]

Apple has asked landlords of its retail stores in the UK for a 50 percent cut to rent, reports The Sunday Times.

If landlords agree to cut rent by up to 50 percent and offer a "rent-free period" of an undisclosed duration, Apple is supposedly offering a considerable lease extension in return. The proposal is understood to relate to stores with several years left to run on their leases, meaning that landlords are not faced with making an immediate decision.

The tactic has reportedly caused "consternation" among property owners. In spite of all Apple retail locations being forced to shut due to the global situation, Apple reported a record $59.7 billion sales increase in the second quarter of 2020 and said that, while stores where closed, online demand for its products was "phenomenal."

The logic behind the request is based on a desire to bring Apple rent rates into line with other UK retailers, many of which have benefited from lower rents as landlords struggled to keep shopping centers occupied. Apple operates 38 retail locations in the UK, all of which shut in recent months. All UK stores have now reopened.

Apple retail outlets are among the most profitable in the industry and their popularity means that landlords tend to be desperate to keep them as a tenant. Apple declined to comment to the The Sunday Times.

Article Link: Apple Asks UK Retail Landlords for 50% Rent Cut Despite Record Sales

 

[emmab2006]

Disgusting. Sorry.

 

[cardfan]

Must have missed something. There’s something wrong with negotiating lease agreements? Why should apples earnings have any bearing on this?

 

[arn]

Must have missed something. There’s something wrong with negotiating lease agreements? Why should apples earnings have any bearing on this?

Because most retailers are asking for discounts because they are losing money due to recent events. It's kind of like Bill Gates haggling with a mom and pop shop about a $20 item.

There's nothing technically wrong with it. But it feels icky.

 

[JohnnyApple$eed]

Apple is managing costs as a business. I don’t see a story here or a reason for anyone to get upset. Apple requesting relief for renting a store front when no business can commence/continue is no different than the landlord charging it’s tenets full rate well knowing no business can commence/continue.

 

[CarpalMac]

This is exactly why Apple is one of the worlds most valuable companies. They are ruthless with everything they do. Landlords still likely have mortgages to pay. I am a believer in everyone taking their hit in this pandemic for the greater good (I know I have) but if a company is doing well then I personally believe they have a responsibility to keep the economic wheels in motion.

Many people on here seem to think of Apple as being some altruistic company, indeed they do try very hard to cultivate that image. However, anyone who has ever had B2B dealings with Apple knows that they are absolutely anything but. Why anyone should cut them some slack when they absolutely would and do not, is beyond me.

Looking forward to seeing how the ADL spin this one against those evil, wealthy landlords.

 

[708692]

Feels like they're taking advantage of the pandemic which is ethically and morally wrong. Shame on you Apple.

 

[AndenIDK]

Apple being Apple, disgusting =P LIke the 50 euro in tax per million in EU.. They dont wanna give back =P

 

[cardfan]

Because most retailers are asking for discounts because they are losing money due to recent events. It's kind of like Bill Gates haggling with a mom and pop shop about a $20 item.

There's nothing technically wrong with it. But it feels icky.

But paying more than fmv is nuts. Apple isn’t in the charity business for landlords.

 

[SW3029]

Lol. Renegotiating existing contracts when the economy goes through rough times is 100% the normal thing to do no matter if you're Apple, Walmart, Subway, or McDonald's. It happens across retail and business (like those businesses who are asking for discounts on existing office space rents).

No one here should be upset about Apple trying to get a better deal from billion-dollar property owners.

This is 100% normal. Apple is a company, not a charity. Regardless, we're about to be hit with a ton of "Tim Apple" is evil posts here on MR.

 

[cmaier]

Apple being Apple, disgusting =P LIke the 50 euro in tax per million in EU.. They dont wanna give back =P

I don’t think it’s unreasonable to renegotiate things given that apple can’t even keep many of these stores open - they are costing apple money in rent without earning Any revenue.
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[AndenIDK]

I don’t think it’s unreasonable to renegotiate things given that apple can’t even keep many of these stores open - they are costing apple money in rent without earning Any revenue.
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How is this the landlords fault ?

 

[Expos of 1969]

Strange that Apple is not insisting that it brings its tax payments in line with other UK retailers who don't have the luxury of a shady deal with Ireland.

 

[cmaier]

How is this the landlords fault ?

It’s not. And if the landlord doesn’t want to renegotiate nobody is forcing them. But then Apple is free to leave the building when the lease is over. The landlord actually gets something out of the proposed transaction here.

 

[luvbug]

It's quite likely it is, in part, due to lower customer traffic in that shopping area, and retail space there being vacated by businesses that have failed due to current business conditions. In other words, their potential for business volume, at that location, has dropped due to the virus. JMHO.

Edit: I should add: Is someone here feeling sorry for the real estate developer ("landlord")?

 

[fumi2014]

This is obscene. After just posting those profits recently and only paying £8 Million in tax on UK profits of £1.8 billion, they've got some nerve. Never underestimate the greed.

No doubt fanboys will be along shortly to say how unfair it is to call them out etc, etc.

Apple are tone deaf to the pandemic. They need to look at the optics of how this looks.

Yes, it's perfectly within their rights to do this. But just because they can doesn't mean they should.

 

[JohnnyApple$eed]

How is this the landlords fault ?

How is it Apple’s fault?

 

[cmaier]

This is obscene. After just posting those profits recently and only paying £8 Million in tax on UK profits of £1.8 billion, they've got some nerve. Never underestimate the greed.

No doubt fanboys will be along shortly to say how unfair it is to call them out etc, etc.

Apple are tone deaf to the pandemic. They need to look at the optics of how this looks.

Yes, it's perfectly within their rights to do this. But just because they can doesn't mean they should.

This is a very weird response. Apple is offering the landlords a deal. The landlords don’t have to take it. If the landlords want their full rent, they can have it.

And, in accordance with the existing lease contracts, when the lease is over apple is free to pull their store and put it somewhere else. Fair is fair.

 

[TechFounder]

People are confused. Apple is seeing record losses at its retail stores like everyone else. Thus, they deserve a break there like everyone else. The record profit is from elsewhere in their business that has nothing to do with their retail operations.

 

[Steve686]

I don’t care what is happening in the world at the moment, but if I could negotiate with my own landlord to lower my rent, I’d do it.
It’s a negotiation. Apple isn’t refusing to pay their rent.

 

[Apple_Robert]

I don’t think it is wrong to ask for a discount. We do it all the time with cars, clothes, houses, and numerous other items. The landlord is free to say no.

 

[AndenIDK]

How is it Apple’s fault?

Its not, but its their contract.. Most ppl loses in this current situation, may takes a hit. .. But the riches company in the world.. Not paying taxes, record bringing sales etc etc. I cannot feel kinda disgusted with them, taking advantage of the situation

 

[CarpalMac]

Lol. Renegotiating existing contracts when the economy goes through rough times is 100% the normal thing to do no matter if you're Apple, Walmart, Subway, or McDonald's. It happens across retail and business (like those businesses who are asking for discounts on existing office space rents).

No one here should be upset about Apple trying to get a better deal from billion-dollar property owners.

This is 100% normal. Apple is a company, not a charity. Regardless, we're about to be hit with a ton of "Tim Apple" is evil posts here on MR.

We are in the middle of a global pandemic. Nothing is 100% normal right now.

 

[esjwe]

Why should landlords not be affected by COVID-19? What’s special about them? This is just one example, but there is millions and millions small businesses out there that go bankruptcy and a lower rent would certainly help.

 

[citysnaps]

I see no issue with this. If market rates have fallen, there's no reason for Apple to pay more.