As expected Australia’s largest shopping mall owner Scentre Group (owner of the Westfield chain of shopping malls) has reported a massive loss for the six months to June 30 after a savage write down in the value of its centres brought on by COVID-19.
Scentre reported a loss of $3.6 billion for the first half of its 2020 financial year.
That was after It reported an unrealised non-cash reduction of $4.079 billion in the value of its vast Westfield shopping centre portfolio.
The plunge in the value of Westfield’s malls has flagged earlier this month in a trading update from the company and saw the group report a statutory loss of $3.613 billion for the six months to June.
The loss was exacerbated by a slump in revenue from tenants unable to pay rent. Mosaic Brands (see separate story) yesterday revealed it will be contributing to that with a massive $200 million-plus loss and the closure of hundreds of outlets, many of which are in Scentre malls.
Scentre said in its report on Tuesday that it had struck provisions for the financial impact of the pandemic with a credit charge of $232 million for the half-year period.
Scentre’s result mirror those of its rivals, led by Vicinity Centres, the country’s second-largest shopping centre landlord, which saw $1.79 billion wiped off the value of its extensive portfolio from COVID-19.
Scentre said the portfolio’s occupancy was 98.8% at the end of June 2020.
The mall owner and manager reported funds from operations – a key industry measure of profitability – of $362 million or 6.96 cents a security, down from more than $670 million a year ago (12.09 cents).
Scentre Group CEO Peter Allen said: “I am very proud of our team, particularly how we responded and adapted to the significant changes brought about by the COVID-19 pandemic. Our results, including the ability to generate an operating cash surplus, demonstrate the long-term resilience of our business.
“A fundamental strength of our business is the strategic location of the Group’s network of 42 Westfield Living Centres. Our centres are in close proximity to the most densely populated urban areas with more than 16 million people living within a 30-minute drive of one of our centres.
“We remained focussed on providing our customers with the ability to continually meet their needs throughout the period. We did this by remaining open as well as implementing, and communicating, the highest standards of health and safety protocols.
“As customers are returning to our centres, more than 93% of retail stores are open across the portfolio (excluding our Victorian centres). Portfolio occupancy was 98.8% at the end of June 2020.
“We accelerated strategic initiatives such as Westfield Direct and Westfield Plus, leveraging the convergence between physical and digital, to facilitate customers connecting and interacting with our retail partners beyond the traditional physical interaction.
So far this year, Scentre says it has raised or extended $5.8 billion of additional funding, including $3.4 billion of bank facilities and $2.4 billion of long-term bonds. The Group currently has available liquidity of $4.4 billion, sufficient to cover all maturities to January 2023.
Investors understood that the bad news was in the market and sent the securities up more than 4% to $2.11.
