Apple asks landlords of its UK stores to halve the rent

midian182

Posts: 6,005   +50
Staff member
A hot potato: Apple has asked the landlords of some UK stores to cut rents by 50 percent and offer a “rent-free period” in exchange for extending leases by several years. The request comes after Cupertino’s second-quarter sales put it above Saudi Aramco (Saudi Arabia’s national oil company) as the world’s most profitable company.

As reported by The Sunday Times, Apple is only proposing the deal to stores that still have a number of years left on their lease, allowing landlords plenty of time to make a decision. The publication writes that the 38 outlets Apple has in the UK are extremely profitable, so the site owners are likely to accept the deals to keep a favored tenant.

Despite temporary store closures during the Coronavirus lockdowns, Apple reported that its Q2 sales increased 11 percent to $59.7 billion. It became the first $1.5 trillion US company in June, and after shares jumped on Friday, the iPhone-maker’s market cap has now reached a record $1.84 trillion.

With Apple performing so well, why is it asking for a rent reduction? The Times states it’s to bring the stores in line with other retail outlets that have seen landlords cut rents to lessen the impact of reduced customer numbers. Several UK companies have gone into administration—a British procedure similar to bankruptcy—as pandemic-related financial hardships bite.

The Times writes that Apple’s request has been met with “consternation” from landlords, unsurprisingly. It appears that the company is taking advantage of a situation designed to help firms in real danger of going under, which doesn’t look good for a near $2 trillion tech giant.

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Adi6293

Posts: 564   +667
What a joke this is, the government should step in a block this, I can not believe they are not embarrassed.......
 
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Shadowboxer

Posts: 915   +543
I have more respect for Apple than most high street landlords so I don’t care. Power to Apple if you ask me. Most high street landlords charge a fortune, doesn’t matter if you’re a struggling business or a massive corporation.
 

Ludak021

Posts: 259   +195
They ask for fortune because they can get it. If Apple doesn't want to pay, someone else will. It doesn't matter what brand you like or dislike, market decides the price. Just like Apple charges thousands for a phone, because market says it's ok, people buy it.
 

brucek

Posts: 497   +574
TechSpot Elite
Most of Apple's stores that I know of are in high quality locations. Landlords who feel they are being low-balled will have wait lists of other tenants to turn to instead.

The question I have is how could the market value have declined by 50% in this period? I wonder if Apple's strategy involved paying intentionally high rates in the initial lease period to skip to the top of the line for the locations they wanted, and they now have enough of them so they willing to give up some of them in order to return to normal market rates on the rest.

And to all the discussion of Apple's profit margins and other irrelevancies, let's grow up. No landlord is going to rent them for less than they are worth, and no tenant should be expected to pay more either.