Liberty Two Degrees slashes distribution as consumers shun malls

Traffic recovered towards end-2020, but still remains below pre-pandemic levels, group says

Property group Liberty Two Degrees (L2D) owns Sandton City in Gauteng
SLOWER TRADE: Property group Liberty Two Degrees (L2D) owns Sandton City in Gauteng
Image: SUPPLIED

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

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