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Author: Debrin Foxcroft

Homeware giant Harvey Norman is refusing to pay rent on some stores during the level 4 lockdown.

The Australian-owned company sent the letter to a number of landlords around New Zealand on March 25 telling them that it would not pay rent while its stores were closed.

Harvey Norman leases stores as well as warehouses.

The letter, provided to Stuff, tells landlords that they had 24 hours to respond otherwise Harvey Norman would consider the matter settled.

Harvey Norman head of property in New Zealand, Anthony Dainty says in the letter that all Harvey Norman stores had been closed under the lockdown requirements.

Harvey Norman gave landlords 24 hours notice that it would stop paying rent during the lockdown.

"As a result all payments of rent, operating expenses, promotion levies and other lease related payments shall immediately cease until such time that the store re-opens and becomes accessible to staff and the wider public," Dainty says.

Dainty told landlords that Harvey Norman was committed to remaining in communication with them but did not indicate any room for negotiation.

"We look forward to your agreement to the above by reply confirmation email. Should we not receive a response within the next 24 hours, we will assume your acceptance of the contents of this letter."

Harvey Norman executive chairman Gerry Harvey declined to comment.

Non-access clauses, which allow a proportion of rent payment to stop temporarily if a property cannot be accessed in an emergency, have become more common since the 2011 Christchurch earthquake.

Colliers International strategic advisory director Chris Farhi said the most common commercial property lease, the Auckland District Law Society Deed of Lease, included a no access in emergency clause.

"The no access clause provides for a fair proportion of payment of rent to stop temporarily if a property is unable to be accessed in an emergency, and there are rights for the landlord or tenant to terminate the lease if the no access continues for an extended period." The default period was nine months.

Harvey Norman executive chairman Gerry Harvey is estimated to be worth A$1.9 billion.

None of the landlords contacted would comment.

Harvey Norman has been given special dispensation to provide some essential items online.

It is not clear how this will impact the company's demand for rent abatement.

According to the company's website, Harvey Norman has 39 stores in New Zealand.

Harvey has a net worth of about A$1.9 billion (NZ$1.92b).

Harvey Norman reported a profit after tax for the half year to December 31 of $213.5 million, down 4.1 per cent on the same period in 2018.

Category: News
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Article: https://www.stuff.co.nz/business/120728348/harvey-norman-tells-landlords-it-wont-pay-rent
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