Facing a substantial fall in rental income, and imminent debt maturities SCentre Group have moved quickly to improve their liquidity position.
SCentre have approx $800m in debt facilities maturing in 2020, with a further $1.6bn maturing in 2021. To avoid the prospect of not being in a position to repay those facilities, Scentre Group today announced that it has obtained additional unsecured bank facilities that increase the Group’s available liquidity position to $3.1 billion as at 1 April 2020.
SCentre haven't commented on the pricing of the new facilities, however they hold a two-year duration and provide the Group with further funding flexibility over the coming period.
Major landlords will shortly be facing negative income, with rental receipts falling short of operating expenses. The ability for Landlords to maintain a cash drain will be difficult to sustain, particularly for groups with interest payment obligations to meet.
Falling income ratios and the prospects of falling valuations will plunge many landlords into technical breaches of their facility arrangements. Banks operating in syndicated arrangements will quickly move to preserve their rights as a workout solution is then worked through.
The better groups will seek to avoid this by raising fresh capital. Equity is scarce and unsecured notes will be expensive but potentially the one of the few sources of capital available in the market.