Paul Kusmierz, the CEO of MMG: We’re not going to act heedlessly. We’re looking for long-term solutions

The government’s protection package does not give equal protection to all players on the commercial real estate market. Without adequate support, it will be difficult for everyone to survive. In my view the government has, unfortunately, failed to take into account all the implications of its package – admits Paul Kusmierz, the CEO of Master Management Group.

How has the epidemic disrupted your activities?

Paul Kusmierz, CEO, Master Management Group: Of course, we’re still waiting to see how the situation pans out. Our entire team has been working at full capacity. We’re making every effort to comply with all the hygiene and safety procedures in our facilities and to ensure that there are no more than 50 people in our stores at one time. We’re talking to all our tenants, both those who have been able to open their stores and those who are still closed. We’re looking for solutions. But this is a very difficult time for all of us.

The government has admitted that it is not screening shopping centre owners. How do you feel about that?

That’s not quite how it is. I understand that tenants are suffering and need support. However, our situation, as with all other shopping centre owners, is also rather tricky. We need to keep each centre in full technical readiness, even if it only has a supermarket open. We have to bear fixed costs. We have to maintain the security, the administration and the cleaning services. At the moment, in the protection package there is no mention of a reduction or total repeal of the property tax, which accounts for the lion’s share of the monthly costs incurred by the owner. If the tenants can’t pay the rent, there is really no one to pay us. The only thing we can do is talk to the banks about the fact that we have no income and won’t be able to pay the loan instalments.

Will they want to listen?

That’s not easy to ascertain. We’re in negotiations with three banks – two are trying to find a solution for us, but the other isn’t willing to listen and just expects regular repayments. In our sector, we are all connected and dependent on each other. So it’s a vicious circle. The entire burden has been shifted onto the owners of shopping centres. If this difficult situation only continues for another month or two, we may be able to manage; but if it goes on for longer than that, then the scale of defaults will start to grow alarmingly. The problem will jump to the next level. Nobody wants to make savings through layoffs, and by that I mean all market players – the banks, the tenants and the property owners. In my view the government has, unfortunately, failed to take into account all the implications of the policy it’s adopted.

Some investors, such as Napollo or Fabryka Biznesu, the owner of the Sukcesja shopping centre, have introduced rent relief and suspensions for their tenants. What move is Master Management Group planning to make?

We have very good relations with our tenants. We’re currently considering a number of scenarios to find a solution that would be good for both parties. Probably all shopping centre owners are doing the same in these difficult times. Nobody wants to tell tenants: pay the rent no matter what’s going on around you. The rent reductions offered by some shopping centre owners is a very nice gesture, but can only be a temporary measure. We all need a satisfactory long-term solution. We don’t know how long this suspension of trade will last, but the longer it goes on, the harder our sector will be hit by it. At the same time, we’re working with the banks on a more comprehensive bailout package, which will be a long-term exit programme for both sides. But we don’t want to act without due consideration and do too little.

Would a return to Sunday trading be a good form of compensation for you and your tenants?

Of course, almost the entire retail sector was hit hard by the Sunday trading ban. I believe that after what has happening to us, we should use every day to work to at least try to make up for the losses that our businesses will suffer. Like the vast majority of retail investors, I’m absolutely in favour of bringing back shopping Sundays.

Has the epidemic disrupted the construction schedule of the Hi Piotrkowska complex?

Of course. The contractors don’t know how many workers they will have on the construction site on any one day. We were planning to finish the work in June, but unfortunately, I now expect that the completion will be delayed by a month or even two. The safety and health of people is the most important thing, so we have to accept it. This makes things difficult because we’ve already signed contracts with future tenants. We also planned to start the construction of two shopping centres in the second quarter of this year, so we already know that the work has been delayed. This is a big loss for us and makes things worse going into the future. However, many investors are having to face such situations.

What kind of problems will we have to deal with once the epidemic is finally over?

It will certainly be some time before people return to traditional forms of shopping after such a long period of forced isolation. Today, consumers can buy almost everything online, and many have already made their first purchases this way. It’s possible that they will stick to this habit for longer. Of course, that’s just a guess. Consumer awareness will certainly change and – as a result – trends and shopping habits. But this doesn’t necessarily mean that the changes will be for the worse, because responsible and quality purchases come at a price. We, as the property owners, will have to contend with many of the side effects of the epidemic on many levels, but we’ll do our best to energise the movement in the centres once they open. I believe that by working hand-in-hand with the tenants that we’ll be able to achieve a satisfactory outcome.