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Landry's CEO and Houston Rockets owner Tilman Fertitta warned a "commercial real estate bust" may be coming if landlords don't give their tenants a break on rent as many struggling businesses remain closed or are operating at limited capacity.
“If you don’t do something, we are going to cause a commercial real estate bust at some time. Because you can’t pay rent if we’re not doing business,” Fertitta said Tuesday on CNBC's "Power Lunch."
He stressed that the situation created by the coronavirus pandemic should encourage landlords and tenants to come to a "reasonable" compromise on rent.
"I want to be a reasonable tenant, and I expect the landlord to be reasonable with me. But don't expect me to pay you 100 percent rent when I've been closed by the county, the city, the state, the government -- and you -- because your mall's not open, you're facility's not open, you have no business, your hotel's closed," he said. "This is a time we all have to work together. Everybody needs to be reasonable, and, once again, everyone needs to feel some pain."
Fertitta's comments come a week after he urged the Trump administration to take action on lease terminations during a roundtable discussion with restaurant executives. He also asked if a portion of funding from the Paycheck Protection Program could be earmarked for large restaurant chains as covered by FOX Business.
He told the president that the coronavirus has left a "devastating" impact on his company, resulting in layoffs for 40,000 employees across his chain of full-service restaurants in March.
Fertitta also acknowledged that he recently borrowed $300 million at 12 percent interest from the PPP because he “needed the liquidity to keep the company afloat” but decided to return the money, saying that he had been criticized for the layoffs but was worried he would be perceived as “that billionaire who took the money from the little business.”
“I took the money and sent it back,” he said at the roundtable. “And didn’t spend a dollar of it.”
Landry’s, which operates well-known restaurants like Del Frisco’s, Rainforest Cafe and Bubba Gump Shrimp Co., owns 600 restaurants across 40 states. The company has reopened 270 of its restaurants, as well as two casinos in Louisiana and Mississippi.