- Liberty Two Degrees (L2D) published its results for the year ended in December 2020 on Monday morning.
- The company, which owns the Sandton City, says the mall's turnover recovered faster in December.
- L2D CEO says super-regional malls are not dead, thanks to the "unrivalled experiences" they provide.
The owner of Sandton City and Nelson Mandela Square Liberty Two Degrees (L2D) says it is satisfied with recovery as turnover is improving in most of its malls.
The company, which also owns the Sandton City Convention Centre, Melrose Arch and Liberty Promenade in Cape Town said that even though footfall in its malls fell by approximately 30% in 2020, the total amount spent by customers was down 20% - indicating an increased spend per customer.
Sandton City had recovered much quicker in terms of customer spend in December with its turnover marginally down 1.5% that month compared to December 2019.
CEO Amelia Beattie said during a media briefing on Monday morning that the quality of L2D's assets will pull it through these dark times because of "unrivalled experiences" their malls provide.
"We believe that customers will again seek our unrivalled asset experiences and we are confident in the quality of our assets," she said.
While many other landlords have bemoaned how the pandemic adversely affected their biggest malls the most, Beattie said L2D believed that super-regional or destination malls will always have a competitive edge that will constantly pull customers to them.
Big malls are not dead
"Super-regionals are not dead. They are very much alive," she said.
"If you need groceries, and your medicine, clothing, and stationery, you cannot get all of that in one neighbourhood centre. You need to go to a whole lot of different places. When you come to a super-regional mall, you get all that in one place," she added.
Beattie said L2D was "realistic" about the pace of recovery of some of its malls because of the constantly changing lockdown restrictions, the anticipated third wave and Covid-19 vaccine developments. The company has chosen not to provide earnings guidance for 2021 because of these issues.
"We understand that it will take some time. [The economy and the sector] is not going to recover overnight. There's a lot of uncertainty in the environment," she said but added that the company is choosing to "move forward every day" and continue rolling out new experiences to its malls.
Tenants still limping
L2D said is retail occupancies stood at 95.3% at the end of December and the few more leases that the company signed at the beginning of this year have pushed this to over 96%.
Even then, the landlord said some tenants are still struggling and it expected to continue extending rental discounts to some of its hotel and restaurant tenants.
"We have budgeted and planned to provide support to them to the end of first quarter this year. But it also depends on whether there are further restrictions imposed by government," said L2D financial director, José Snyders said.
Beattie said even though people may be back in malls shopping, tenants need some time to recover and get some good trade over an extended period to get back to their 2019 financial positions.
The company said its balance is however strong enough to weather these storms despite the R1.7 billion valuation write-downs in its assets in 2020, which wiped out approximately 16.3% of its portfolio value.
At a 20.5% loan-to-value ratio, the Liberty Group-owned landlord has also managed to keep its debt levels relatively low in an industry where Covid-19 has pushed many of its peers' loan-to-value ratios beyond the 40% cap that the market is comfortable with.