Another retailing related company has reported an early impact from the COVID-19 pandemic and lockdowns which disrupted shops in March, April, and May.
GPT, Vicinity Centres, and Stockland have all cut the value of their shopping centres in recent trading updates – Vicinity’s has been the largest at up to 42.1 billion.
SCA reported a 2.9%, or $94.6 million, drop in the value of its portfolio to $3.14 billion this month (from $3.23 billion last December) the write-down will become a one-off item in the 2019-20 results to be released in August.
The cut saw SCA Property Group cut its full-year distribution by 17% on Tuesday after reporting a steep fall in rental income as lockdowns hit its specialty tenants hard.
SCA owns 85 malls anchored by either Woolworths or Coles supermarkets (Woolies injected some of its stores into SCA in a spin-off in 2014) said it would pay a final distribution of 5 cents security for the six months to June 30, taking the full-year payout to 12.5 cents a security.
This was down from guidance of 15.1 cents a security issued in February, before SCA withdrew distribution guidance in March as the pandemic lockdown swept across the economy. SCA also raised $300 million in new capital to give it a liquidity buffer.
In Tuesday’s trading update, SCA said that from March to June 19, it saw a $22 million rent shortfall — or around 10% of its annual rents — while providing tenants with rent deferrals or waivers of $5.4 million for the months of March, April and May.
The company expects the cost of the deferrals and waivers to rise in the next month or so as it sorts through more claims for rent relief. SCA said the rental shortfall was worth 2.2 cents a security in the cut to the final distribution.
SCA said in its trading update for the five months to May that many of its tenants saw “volatile” sales performance.
While sales at supermarkets and discount department stores rose strongly, specialty tenants experienced a “significant decline in sales due to COVID-19 related trading restrictions and forced (or voluntary) store closures, including gyms, nails, beauty, massage, cafes, restaurants, apparel and some services”.
SCA said May saw conditions in its centres improve with 97% of specialty tenants open and trading up from 72% in mid-April “… anecdotally trading has continued to improve from May,” the company noted.
SCA securities closed at $2.35 on Wednesday, down 0.4%.
