SCentre group has announced that its Board and Senior Leadership team will take a pay cut as it deals with the impacts of the COVID-19, but the cuts to investors dividends and to tenants sale are likely to be far worse.
Facing challenges by the mandatory Code of Conduct, SCentre will see cuts in rental revenues as its tenants' business has dropped during the lock down period. Shoppers continue to avoid major Shopping Centres as governments encourage people to only leave home if necessary.
The fall in customer numbers has made it impossible for many stores to feasibly open. According to Westfield, only 39% of shops were operating at Westfield centres across Australia. Clearly if 60% of stores are closed and generating no sales revenue, the impact on rental income in SCentre will be significant for the period of lock down.
Despite seeing these deep impacts, the Scentre Group announced that the Board had agreed to a 20% reduction in Board fees and a 20% reduction in fixed remuneration for the Senior Leadership Team which includes Peter Allen, the Group’s Chief Executive Officer, and Elliott Rusanow, the Group’s Chief Financial Officer).
Whilst the COVID-19 impacted tenant from early March, the new remuneration arrangements only commence from 1 May 2020 and will continue for just 4 months.
On the basis of principal of sharing equal pain, it is hard to see Westfield limiting the impacts on tenants or investors to just -20%.
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