HAGÅTÑA (The Guam Daily Post) — With visitor numbers still way below pre-pandemic levels, the Guam International Airport Authority opted to extend rent relief to tenants and concessionaires for another six months.
The Airport’s board approved the extension of rent relief, which has been ongoing since March 2020, without objection. It applies to so-called “minimum annual guarantee” tenants, who are locked in to paying a fixed amount to the airport.
The deal allows tenants to pay either a percentage of their sales or, if higher, a lower calculated rental rate based on square footage, according to airport Deputy General Manager Ricky Hernandez. This extension covers the months of October 2022 through July 2023.
“Although we’ve seen increases in enplanements since the last time this was approved by the board, they still (are) not pre-COVID levels. … With Typhoon Mawar, that had significantly impacted our recovery for June and the latter part of May,” Hernandez told board members Thursday during a board meeting.
Board Vice Chair Gurvinder Sobti asked that management hold tenants accountable for paying what’s due.
“This is a big relief, … so at least to help their product, they should be (making) payment on time,” he said.
It’s unclear what the total financial impact of rent relief has been over the past three years, but it’s at least in the tens of millions of dollars, based on Airport financial statements released by the Office of Public Accountability.
Lotte Duty Free Guam, the luxury vendor for the airport, is covered by rent relief. Lotte is obligated to pay a minimum guarantee of $15.1 million annually, though several hundred thousand dollars in offsets have been negotiated due to impact from construction at the terminal in recent years, according to financial statements. Lotte paid $8.95 million in fiscal year 2020 and $4.4 million in fiscal 2021 for its use of the main rental space.
As of May, Airport revenue remains less than two-thirds of what it was in fiscal 2019, according to an update at the board meeting. Collections were at $39.9 million at the end of May, lower than the $44.6 million projected for that time this fiscal year.
“It’s still rough times in this business,” Chair Brian Bamba said.
Extensions tabled
Though the airport this week received legal authorization to extend existing concession contracts for up to three years, expiring concession agreements weren’t discussed at the board meeting.
Bamba said he had a conflict of interest in the matter, which was listed on the agenda, as well as a conflict in discussion over an ongoing lawsuit filed by former airport luxury vendor DFS Guam. Without him, the board wouldn’t have a quorum, Bamba said.
Bamba is the managing director of IP&E Holdings LLC.
Lotte Duty Free’s contract with the airport is set to expire July 20, The Guam Daily Post reported previously.
