Buzz Blog: Fertitta returns federal funds, warns of commercial real estate bust
Island-born businessman and billionaire Tilman Fertitta generated much buzz this week when he warned Tuesday on CNBC’s “Power Lunch” of a commercial real estate bust caused by pandemic shutdowns and restrictions hurting restaurants and retail. Fertitta called for reason and compromise among stakeholders.
“We can’t pay rent if we’re not doing business,” said Fertitta, owner of the Landry’s Hospitality empire, along with Golden Nugget casinos and the NBA’s Houston Rockets.
“I want to be a reasonable tenant, and I expect the landlord to be reasonable with me,” Fertitta said. “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, your 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.”
On May 18, Fertitta also met with President Donald Trump, who hosted business owners from across the restaurant industry for a roundtable discussion on how to help the industry make a comeback as the economy reopens.
Even though his company was approved for a Payroll Protection Program loan through the Small Business Administration, Fertitta returned the pandemic relief funds because he didn’t want to face criticism for being “the billionaire that took the money from the little business,” reported Eater Houston, which covers the restaurant industry.
“I wanted to put 40,000 people back to work on May 1, but couldn’t take the criticism,” Fertitta said of his decision to reject a PPP loan. “I took the money and sent it back and did not spend a dollar.”
Trump ribbed Fertitta about the decision.
“They found out that you’re very rich and they said, ‘What the hell?,’” Trump said of Fertitta’s critics, according to Eater Houston.
Fertitta, CEO of Landry’s Inc., asked Trump and Treasury Secretary Steven Mnuchin to “add a category” to the Paycheck Protection Program for the “larger private restaurateur” and to “do something with lease terminations” to provide his company financial relief during the pandemic, according to The Washington Post.
The businessman explained he had to lay off 40,000 employees from his chain of full-service restaurants in March, and he had recently borrowed “$300 million at 12 percent” interest because he “needed the liquidity to keep the company afloat.”
Fertitta and Landry’s have vast holdings on the island and in Kemah, including the Galveston Island Historic Pleasure Pier and the Kemah Boardwalk.
Landry’s has more than 600 restaurants, and more than half of those are still closed because of the pandemic.
Landry’s has reopened 270 restaurants, as well as two casinos in Louisiana and Mississippi.
So, what do you think? Should retailers and restaurants get a break on rent during the pandemic?