Vicinity Dumps Guidance & Suspends Buy Back

18 March 2020

Vicinity Centres announced today that it is withdrawing both its FY20 earnings and distribution guidance and suspending its unit buy back program, following the escalation in uncertainty surrounding the impact of COVID-19 on Vicinity’s operations.


Mr Grant Kelley, CEO and Managing Director, said: “Since announcing our interim results in mid-February, we have seen a further deterioration in the retail trading and operating environment, with increasing uncertainty around the impacts of COVID-19. Given this, we have made the decision to withdraw our FY20 earnings and distribution guidance provided at that time.


“As always, our priority remains the safety, health and wellbeing of our employees, customers, retailers and the broader community, and we are following the recommendations of Federal and State health authorities to further prevent the spread of COVID-19. We recognise the impact COVID-19 is having here in Australia and will continue to work with our retailers during this period of adjustment.


“Our shopping centres continue to play an essential role for our communities, especially during this time of concern, providing access to food, household items, products, medical services and banking for everyday needs. Shopping centres have been defined as providing ‘essential services to the community’ by the Federal Government, and as such we will continue to be open for our customers, retailers and the broader community.”


Anecdotal evidence suggests retail trade in non food categories is down 60% – 80% leaving many retailers unable to afford rental payments nor the staff required to keep a business running. Vicinity and other major retail Landlords will be facing extensive earnings shortfall during the current 6 month period as they hope to hold on to retailers as opposed to terminating leases and hoping to find replacement tenants.


Initially, the landlords focus is on balance sheet strength, with most carrying low levels of gearing.


Vicinity declared that it has a solid balance sheet and currently operating well within debt covenants. Mr Kelly said, "we have $1.3 billion of undrawn facilities…. [and the] flexibility to defer capital expenditure on major projects until COVID-19 uncertainties are resolved. However, as part of our prudent approach to capital management, and given volatile market conditions, the securities buy-back program has been suspended.”


Mr Kelley said: “We will continue to monitor trading conditions, and to work constructively and creatively with all of our various stakeholder groups. We will provide further updates as appropriate.”