Liberty Two Degrees slashes distribution as consumers shun malls

Property group Liberty Two Degrees (L2D), which owns stakes in malls including Sandton City and Melrose Arch, has almost halved its full-year distribution as larger centres continue to struggle with fewer customers due to Covid-19.

Overall foot count fell 30.2% in the group’s year to end-December, but the landlord said it still has confidence in the value of super-regional malls in good locations, while it has seen a recovery in traffic and spending towards the end of the year.

A number of landlords have noted that larger regional malls have been under particular pressure during Covid-19, as customers instead seek to shop closer to home, and at less-crowded locations.

The tenant arrears more than tripled to R96.4m at end-December, while the group’s portfolio vacancy rate increased to 6.7%, from 4.7% in 2019.

L2D provided for R112m in Covid-19 rental relief and net property income fell 45.6% to R377.2m, with the group also seeing lower parking revenue, while hotels and convention centres were also under pressure.

The group swung into a R1.49bn loss, from profit of R534.5m previously, with the value of its portfolio falling 16.3% to R8.49bn.

L2D’s full-year distribution of 32.33c per share is a 46.5% decline, and represents an almost R300m payout.

The group said it still has confidence in the quality of its assets, and Sandton City’s turnover in December 2020 was down only 1.5% from the same period in 2019.

This demonstrates that consumer spending was not only captured by neighbourhood centres as a shopping format.

Though footfall for the year was down about 30%, the total amount spent by customers was down 20%, which indicates an increased spend per customer, L2D said.

Overall traffic has also improved from a 60.8% decrease in quarter two, when the most severe lockdown was in place, to a 21.4% decrease from 2019 in the fourth.

In morning trade on Monday, L2D’s share was up 0.62% to R4.88, having surged 12.79% on Friday, when it gave improved guidance on its fall in distribution per share through a trading update.

L2D’s share has fallen 20.65% over the past 12 months, while the JSE’s property index has lost 29.66%. — BusinessLIVE