Despite the solid rebound in retail sales, the continuing shortfall in the numbers of shoppers, tourists and CBD office workers has seen Vicinity Centres, the country’s Number 2 mall operator, knock another half a billion dollars off the value of its centres.
Thanks to the continuing shortage of feet ongoing slump in shoppers, tourism and city office workers has slashed the value of Vicinity Centres has written down the value of its 60 directly-owned centres by $570 million.
Vicinity, which owns and manages malls across Australia including a half share of the country’s largest shopping centre Chadstone, said the value of its pandemic-hit property portfolio slumped 4% over six months to December last year.
The continued weakness follows a nasty 11.3% drop over June half of 2020 as the full force of the pandemic disrupted retailers across the country.
In June of 2020 Vicinity warned of a 13% drop in the value of its centres when raising $1.4 billion in new capital. The size of the impairment was trimmed to 11.3% or $1.79 billion.
The write down, if sustained, will see more than 18% written off the value of this big collection of malls, or more than $2.3 billion below the level at the end of December, 2020.
The move will see analysts look more closely at the mall valuations for the biggest operator, Scentre and smaller groups such as Mirvac, SCA and Stockland.
The securities fell 2.5% to $1.545.
CEO Grant Kelley, CEO said in yesterday’s statement that “COVID-19 impacted the global economy materially in 2020, the effects of which continue to be felt into 2021, and this in large part has resulted in Vicinity’s December 2020 valuations softening 4.0%.
“While we remain cautious on the impact of potential future outbreaks of COVID-19 on retail trade, and the challenges of the evolving retail environment, we are encouraged by a number of factors.”
“Our CBD centres in Brisbane, Sydney and Melbourne, however, continued to be impacted by the current low levels of tourism and office occupancy. We welcome the efforts of governments and the private sector stepping up the return to CBDs for workers and visitors in 2021.”
“With their greater weighting to non-discretionary retail, our Neighbourhood and Sub Regional centres have had more resilient valuations generally, while providing a higher income yield.”
That’s because consumers remain unwilling to travel far 9or are not working in major CBD areas) and are at home and shopping locally.
Vicinity will release its interim results on February 17.
Perhaps there’s another reason for the write down – the still booming sales online from a slew of retailers such as Mosaic Brands (see separate story).
People are at home on their computers or phones buying, browsing, ordering goods – from grog, to food, furniture, lighting, sports goods and more. That means they are not coming into centres and shopping.
