In an effort to encourage customers to continue to visit their malls, Scentre Group acknowledged the statements made today by Australia’s Prime Minister, the Hon Scott Morrison MP, that shopping centres are ‘essential activities’ and will remain open for normal trade.
Customers are however cautious and are avoiding shopping centres and other large public spaces making trading extremely difficult for retailers.
Scentre Group CEO Peter Allen said: “Our Westfield centres, which include supermarkets, grocery stores, food markets and retail stores are an essential part of the Australian community and, as the Prime Minister has stated today, play an important role in assisting our community as it works through the response to the COVID-19 pandemic.
“All our Westfield centres remain open for trade and we acknowledge their importance in delivering goods and services to the community as well as supporting employment and economic activity across the nation.
“We will continue to manage and operate our centres to ensure the wellbeing of our customers and retail partners. This includes a heightened focus on high standards of cleanliness and hygiene.
“We are also working with our retail partners as they manage their business through this volatile period.
Westfield and other major landlords strictly control the trading hours of the their Centres through their lease agreements and expect all retailers to comply with these trading hours, whether it is profitable to do so or not. If the Landlords close a Centre or businesses are prohibited from trading by law, then it is possible that the tenants may be entitled to a rental abatement. If a force majeure event occurs (and is documented in the lease), the tenant could argue that the lease should come to an end.
The major landlords do not wish to see either of those outcomes eventuate and are being extremely careful to manage their legal positions as unintended consequences could emerge.
Scentre said, “We will continue to engage with the government and relevant health authorities to ensure that our centres fulfil their role in providing essential goods and services to the community whilst taking the necessary health precautions.
“We ask customers to go about their day-to-day activities in our centres in a considerate and respectful way as outlined by the Prime Minister today.”
The Group maintains a strong financial position. As at 31 December 2019, the Group’s available liquidity was $1.8 billion, interest cover was at 3.6 times, FFO to Debt of 10.3% and balance sheet gearing of 33.0%.
The Group has sufficient liquidity to cover all debt maturities in 2020, however the more pressing concern for investors, who have faced a 52% decline in share price since mid February, is whether what impacts the Coronavirus will have on their rental revenues – a key question which SCentre expect to provide an update on at its Annual General Meeting on 8 April 2020.