The former Westfield retail empire of Frank Lowy, now in the hands of European Unibail-Rodamco, has been hit hard by the global pandemic with a 14 per cent fall in sales and just over half of its mall tenants paying rent.
The European-based retail giant, which bought Westfield for $22 billion in late 2017 and is dual-listed in Australia, said its net revenue income (NRI) for the first half of the financial year fell 14.4 per cent. The United Kingdom was the worst hit with a 27.5 per cent drop in NRI, and its US-based flagship malls were down 15.3 per cent. The overall portfolio was down 5.1 per cent in asset value.
The Australian and New Zealand Westfield malls are owned and managed by Scentre Group.
Unibail’s chief executive Christophe Cuvillier said in an overnight briefing from Paris the first half was “significantly impacted by COVID-19”. He said there was ongoing risk from government lockdown measures to stop the coronavirus’s spread, such as those being reimposed in California and Catalonia, Spain.
“While malls were allowed to open across Europe, stores in enclosed parts of centres in California were ordered to close again from July 13, with kerbside pick-up permitted, while Westfield World Trade Centre [in New York] still hasn’t been allowed to reopen. These developments show that the risk of the pandemic has not fully subsided,” Mr Cuvillier said.
Rent collection from its mall tenants fell significantly with the shopping centre division down 67 per cent in the first half. However, the full impact of the mall lockdowns was felt in the three months to June 30, where it was only 38 per cent. As at July 24, collection for July stood at 50 per cent. The group expects an improvement in its rental collection following negotiations with tenants regarding COVID-19 assistance.
JP Morgan Australia analysts predicted a 17 per cent decline in value of the shopping centre portfolio during 2020.
On the ASX, Unibail shares were down 4.5 per cent to $3.81.