Australia’s two largest ASX-listed retail property managers, Scentre Group and Vicinity Centres, are focused on Covid-19 recovery as shopping centre stores reopen across the country.
More than half of retail stores were operational in the first week of May after a whirlwind quarter which saw both groups withdraw earnings and distribution guidance.
The noticeable difference between the groups’ March quarterly results was Scentre announced it would not pay an interim distribution for the half year period, ending 30 June.
Scentre Group stocks plummeted 58 per cent from the start of March at $3.38 to a low of $1.43 on 24 March and have recovered slowly to around $2.28.
Vicinity Centres stocks also dropped 55 per cent from the start of March at $2.19 to a low of 0.98 on 23 March and have recovered to around $1.51.
The quarterly results also revealed the major Australian retail landlords maintained their credit ratings, reduced board fees by 20 per cent, were in rent relief negotiations and recorded a slow March following positive sales growth earlier in the year.
Despite growth in the first quarter, Scentre and Vicinity remained cautious, delaying non-essential development projects with the exception of opening new Kmart stores.
The $56 billion portfolio continued to grow with all 42 Westfield Living Centres remaining open during the pandemic and sales were up $656 million for the year.
In spite of the 2.7 per cent growth the group decided not to pay dividends for the half year period deciding that “retaining this capital will further strengthen its financial position and ability to continue to deliver long term returns to its security holders”.
In the first two months of the year total in-store sales were up 3.6 per cent and once the lockdowns were fully in-place sales dropped by 17.6 per cent compared to the previous corresponding period.
Once restrictions eased 57 per cent of retailers reopened and customer patronage doubled from the low of March compared to the Mother’s Day weekend.
These retailers represent 70 per cent of Scentre’s gross lettable area with more shops scheduled to reopen in coming weeks.
Scentre had planned on opening an entertainment precinct at Mt Druitt with venture partner Dexus Wholesale Property Fund but decided to defer the project during the pandemic.
Meanwhile they continued work on an entertainment precinct in Doncaster, a new Kmart in Carindale as well as downsizing the Myer store at Belconnan.
“We are reviewing the timeline of pending redevelopments and will provide an update at the half year,” the announcement stated.
Vicinity Centre’s $26 billion portfolio had its annual turnover increase by 1.6 per cent, with supermarket sales up 6 per cent and other stores up by 0.6 per cent.
Covid-19 caused a large sales variance in March, dropping the portfolio by 16.5 per cent, supermarket sales went up by 22.2 per cent and other store sales reduced 31.1 per cent compared to March 2019.
As the restrictions eased at the start of May, half of Vicinity stores reopened representing 65 per cent of portfolio gross lettable area.
Vicinity also moved forward with the acquisition of a 50 per cent stake in shopping centre Uni Hill Factory Outlets in Victoria, which was planned to be relaunched as the group’s seventh DFO.
The redevelopment of Chatswood Chase was put on hold but the $63 million Kmart expansion at Ellenbrook Central, WA continued.
Vicinity Centres chief executive Grant Kelley said although they were boosted by Australia’s containment of Covid-19 he expected challenging conditions to persist for at least 12 months.
“Our goal is to ensure the viability of our industry through to the other side of the pandemic,” Kelley said.
“This relies upon both the continued sustainability of retailers, combined with the critical infrastructure of shopping centres, which collectively employ a significant number of Australians, and provide a broad range of essential and discretionary goods and services for our communities.
“Over the past week, we have seen early signs of a recovery in centre visitation, as restrictions have begun to ease.
“Retailers who closed their stores voluntarily in prior months are beginning to reopen for trade, with 530 stores reopening in the past seven days.”