Pretty sure the UK landlords who own those properties worth many millions are doing fine. No problem with renegotiating rent when the rates change
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Apple Asks UK Retail Landlords for 50% Rent Cut Despite Record Sales
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Sure. Feel sorry for them. And maybe cutting rent now in exchange for more guaranteed rent later makes sense to them. If not, no harm done.
After all, right now the landlords may be able to defer their mortgage interest, etc., so maybe they don’t lose much by taking the deal. Maybe they do the math and realize that when the lease ends,given what has happened to the real estate market, apple will be able to negotiate a much lower rent, so they are better off locking in a higher number now for an extended lease term.
Landlords don’t have to take the deal; some will, some won’t. But why is it distasteful to see billion dollar businesses negotiating in public?
Why? If Apple's terms aren't acceptable to its landlord, its landlord can say no. What about the pandemic should mean that Apple is suddenly obligated to pay more than the going rate?
Apple, don’t be evil.
In my wife’s daycare, if a parent lost their job from the pandemic and has their kid at home, they pay nothing to hold the spot. If they lost their job and need the kid in daycare to look for a new job, they pay a discount. If they quarantine their kid at home but still have their job, they still pay my wife if they want to hold the spot. Just be reasonable, Apple, like my wife. Don’t get greedy and help when able. We’re all suffering together one way or another, while you’re raking in billions. A true test of character is how someone behaves in a crisis. We’re all watching.
In my wife’s daycare, if a parent lost their job from the pandemic and has their kid at home, they pay nothing to hold the spot. If they lost their job and need the kid in daycare to look for a new job, they pay a discount. If they quarantine their kid at home but still have their job, they still pay my wife if they want to hold the spot. Just be reasonable, Apple, like my wife. Don’t get greedy and help when able. We’re all suffering together one way or another, while you’re raking in billions. A true test of character is how someone behaves in a crisis. We’re all watching.
Being apple, the wealthiest company in the world, asking for any form of relief or cost reduction is going to automatically put them in a controversial position because, well, they have a trillion dollar value and several hundred billion in cash. Had the company not been Apple, but a small retailer, nobody would’ve argued rent reduction like this.
For me personally, given their bean counter nature, it is not so surprised that they negotiate a better renting contract with their landlord. But at the same time, pocketing all the wealth during this darkest time is no difference than billionaires earning several hundred millions more than BEFORE the pandemic while millions of people are unable to pay their own rent and bills etc... Our society has gone horribly wrong, and this pandemic only exacerbates the situation.
Edit: Seems that there are two camps, none of which will agree to each other. I never saw comment section being so divided before.
For me personally, given their bean counter nature, it is not so surprised that they negotiate a better renting contract with their landlord. But at the same time, pocketing all the wealth during this darkest time is no difference than billionaires earning several hundred millions more than BEFORE the pandemic while millions of people are unable to pay their own rent and bills etc... Our society has gone horribly wrong, and this pandemic only exacerbates the situation.
Edit: Seems that there are two camps, none of which will agree to each other. I never saw comment section being so divided before.
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Ah the "If you don't like Apple, just use Android" retort.
I am amazed that people are fine that a corporation can have so much influence that they can essentially bulldoze anything they want.
Even the mafia never had it this good. I guess that's what happens when shareholders and shills came into the scene.
Start low and then move upwards. Sheez you must get ripped off left right and centre.
And never did anyone claim otherwise; but thanks for the straw man argument. Obviously the point is that it makes ZERO business sense to just "do nothing" when you have a part of your business losing money.
If any business can re-negotiate more favourable conditions to minimise losses, they obviously should. That Apple has the largest market cap in the world makes zero difference. Nor does it matter that they just posted record profits in their non-retail business.
Good business practices are not reserved for small 1-person outfits or companies that are in the red.
Half of London’s golden property areas including triple A regent street is owned by mafia. The Chinese, Russia and Saudi Arabia own most of london prime real estate. So your point is mute.
Wish I could negotiate a lower price for my next Apple product. Sorry, bad economy, so I want it for 1/2 the price.
Separate to whether Apple is morally right to renegotiate their rents in the middle of a pandemic, I'm curious to know why people think landlords are greedy? They charge businesses to lease their property at a price which the business agrees to upfront. Businesses choose whether to lease the properties so not sure how that makes them greedy? I've seen several comments saying that the property portfolios are supposedly worth billions – is that what makes them greedy? If that's the case, why is Apple, a company worth a trillion dollars, with property probably worth billions and quarterly sales and yearly profits easily exceeding the value of some of the landlord portfolios, not considered greedy for charging premium prices for their products when they could sell them for a lot less?
Apple is a business with requirements to growth and return on investments, just like the landlords that own the commercial properties. Pension funds invest in both commercial property and business like Apple. If you think landlords are greedy, then the same must be true of Apple.
Apple is a business with requirements to growth and return on investments, just like the landlords that own the commercial properties. Pension funds invest in both commercial property and business like Apple. If you think landlords are greedy, then the same must be true of Apple.
Apple has a laundry list of items pandemic related, including paying their employees. They are not greedy by renegotiating a lease, it's a good business decision and win/win for landord and tenant.
I don't know where you guys live but here in Houston the Apple stores were closed for almost 2-3 months and then barely reopened and are now closed again. The physical stores are hurting just like everyone else. Why not ask for some better lease terms?
Exactly.
Apple Global may have had record sales, but given they can not use the physical premises (and likely nobody else can either - if the landlord was to attempt to re-lease it), this is better than them saying "screw it, we are closing the store permanently".
Which I presume they could quite easily justify. Essentially right now they are paying for something they can not use.
In a company as large as Apple, regional stores are no doubt treated like smaller business units. Apple global has little to do with the viability of a particular physical Apple store. And if a particular physical store is not viable, it will probably close - permanently.
The landlord has a choice - retain a long term prestigious tenant. Or lose them and likely not be able to re-lease.
Leases can be and are broken as circumstances change, and the break lease penalty exists for this reason. I'm sure both parties are well aware of the cost associated with this, and have taken this into consideration.
No, completely correct. The contracts were valid. They stopped paying. It may have been legal, but it is still what happened. There is no connection between that and Apple offering a voluntary deal that property owners can choose to accept or not.
They aren’t. As it’s been pointed out many of the stores are located in INTU shopping centres which is in administration.
Within 15 miles of me I have two INTU shopping centres near me, both have an Apple store in them. One of them is the UK’s largest city centre shopping mall. This shopping mall is attracting potential new buyers and is helped by the fact that the city owns about 40% of it.
The other shopping mall was until recently the largest shopping mall in Europe, and is the largest in the U.K. This has a slightly smaller Apple store, and has had a few big name and large stores pull out recently. It is not attracting any potential new owners and looks likely that it will permanent close unless there is a quick change in conditions.
Although having Apple sign new long term deals to each location would be a massive help to each shopping centre in the long run, in the short term having a rent free period would make things very difficult for both shopping centre’s. It’s no good having Apple signed to 10 year leases if the shopping centre’s don’t have enough money to see the year out.
Apple is not taking advantage of any law. The have not cut their payments nor threatened to do so. They have simply offered an exchange lower rent now in exchange for a longer term on their contracts. Property owners can accept, counter or reject their offer. It has nothing to do with any special COVID-19 related laws or rules.
This is simply two businesses negotiating. If the property own does not like what is on offer they can reject it. If the retail market is much better in 2 to 3 years against all odds they might be able to get more. If it is worse, as this pandemic has pushed even more retailers out of business, they probably get less, and if Apple has the option of a better location that is then available, maybe they move and the property owner gets nothing.
Having an Apple store with a long term lease will make it much easier for them to get the UK equivalent of Debtor in Possession financing to weather this storm. On the other hand, having Apple making it clear that they are reconsidering the location‘s future probably not such a good thing.