SCA Property Group with Resilient Portfolio24 March 2020
Despite SCA Property Group holding a portfolio of essential services, the majority of whom are current trading well, the COVID 19 pandemic has forced the group to withdraw its earnings & distribution guidance and any of its forward looking statements.
All but one of SCA's 85 shopping centres are anchored by either a Coles or Woolworths supermarket, and as such are benefitting from the elevated foot-traffic being generated by these anchor tenants over recent weeks. These anchor tenants represent 48% of gross rental income of the trust. Specialty tenants account for the other 52% of gross rental income and are heavily weighted toward non-discretionary categories.
In recent weeks, the majority of specialty tenants have been trading strongly, including pharmacies, medical centres, discounters, liquor and fresh food retailers, however as more tenants are being forced to close, the group is likely to be exposed to a loss of income.
With a total annual gross property income of around $300 million, the SCA have estimated that the income from stores currently not permitted to trade is approximately 0.6% of our annual gross property income, per month (or 7% of our gross property income on an annualised basis).
SCA advised that the are working closely with these effected tenants through this difficult period.
The Group expects that any impact on FY20 earnings from any rental lost from currently closed tenants is expected to be partially offset by increases in percentage rent from our anchor tenants, interest expense savings and cost savings, though it remains uncertain what further closures may occur.
The Group’s balance sheet and debt position is robust. The group have $176 million in cash and undrawn facilities. Our next debt expiry is the $225 million Australian medium term note on 20 April 2021 for which the group expect to have available funds from existing undrawn facilities and positive cash flows over the next 13 months to repay that facility if required.