Leading bicycle retail chain peddles a rent relief sob story to its landlords as sales soar

One of Australia’s largest bicycle retailers demanded rent relief from landlords despite boasting that business was booming.

Bike retail business 99 Bikes wrote to all its lanlordds saying they had a choice between accepting a two-month 50 per cent rent reduction, or a rent deferral plan.

One of Australia’s largest bicycle retailers demanded its store landlords accept big rent cuts or deferrals because of economic hardship suffered in the pandemic, despite boasting publicly business was booming “with everyone going gaga for cycling” to stay active.

99 Bikes, which has 47 stores across the country, wrote to all its landlords this month to tell them they had a choice between accepting a two-month 50 per cent rent reduction, or a rent deferral plan, because increased costs meant “protective measures” were needed to keep stores open.

Commercial lease rules issued by Scott Morrison’s national cabinet say landlords must work with tenants “suffering financial stress or hardship” to reach temporary rent “waivers and deferrals”.

The code of conduct says rent concessions must be “based on the reduction in the tenant’s trade during the pandemic period and a reasonable recovery period”.

Matt Turner, the founder and managing director of Pedal Group, which owns 99 Bikes, described just days ago how his company had experienced a “huge uptick in business”. Mr Turner told The Australian Financial Review for a report on April 14 that sales had increased 50 per cent, and sales were even higher at city stores in Sydney, Melbourne and Brisbane.

He said the company had employed 50 extra staff to cope with extra demand, of whom about half were people stood down from their jobs at the Turner family’s travel agent company, Flight Centre.

Queues outside 99 Bikes reflected a growing demand for bikes as people looked for new ways to stay active or avoid public transport. One store salesman said trade had been “non-stop”.

Despite this, 99 Bikes wrote to all landlords this month “seeking assistance with rent in relation to the economic impacts of the COVID-19 crisis” and said protective measures were necessary to stay open because “we are experiencing increased costs”.

The sternly worded letter from 99 Bikes property manager Jeremy Betts issued an ultimatum to landlords, saying the company would be taking one of two options regarding future rent payments because of “these increased costs and uncertainty of future trade”.

Landlords could either agree to a 50 per cent rent cut over May and June, or accept a deferral plan of two months’ rent paid in arrears until January. Mr Betts gave landlords until the “close of business Friday 17th April” to confirm which option they chose.

“We are not aware of any valid reason why the landlord would not agree to either of the above actions to ensure that they retain 99 Bikes as a valued tenant,” he wrote.

Mr Betts told The Australian more than half of 99 Bikes’ landlords had agreed to the company’s rent-delay program so far, and one or two had agreed to rent cuts.

Asked why 99 Bikes was demanding rent concessions if business was booming, Mr Betts said the measure was a “precaution”.

On Wednesday, after Mr Betts spoke to The Australian, 99 Bikes emailed landlords saying it had dropped its demand. In further comments to The Australian, Mr Betts said: “We decided we can pay on time, in full, even though a lot of them had agreed to deferrals.”