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Liberty Two Degrees pays full dividend as consumers continue to return to malls

Among its leading properties, retail trade turnover at Sandton City increased 31.4 percent compared with the same period in pre-Covid 2019.

Among its leading properties, retail trade turnover at Sandton City increased 31.4 percent compared with the same period in pre-Covid 2019.

Published Aug 2, 2022

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Liberty Two Degrees has reported continuing recovery in its retail-focused property portfolio and will pay a full interim dividend that is 11 percent above the same time last year.

The strong recovery was reflected in the 10.2 percent increase in the foot-count for the six months to June 30, compared with the same time a year before.

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Among its leading properties, retail trade turnover at Sandton City increased 31.4 percent compared with the same period in pre-Covid 2019; Midlands Lifestyle Centre’s was up 72.2 percent; while Botshabelo Mall’s increased 36.3 percent.

"Our customer experience initiatives continue to pay off as the portfolio records the highest foot-count in the first six months of 2022 compared to the prior three comparative years. The portfolio consistently experiences double digit growth in foot-count, having not dropped below 10 percent this year,” chief executive Amelia Beattie said yesterday

Retail turnover was up 16.1 percent and retail occupancy stood at 97.2 percent.

Average hotel occupancies also started to recover: Sandton Sun was at 71.5 percent, compared with 39.8 percent at the halfway stage in 2021. Garden Court’s occupancy improved to: 40.7 percent from 12.8 percent.

Beattie said the positive momentum had been supported by the lifting of the National State of Disaster and the removal of the remaining Covid-19 regulations, which contributed to a return in both retail and consumer confidence.

There had been a 16.1 percent improvement in turnover growth compared to 2019. First quarter turnover was 13.6 percent over the first quarter in 2019 and was tracking 25.4 percent ahead of Stats SA's industry benchmark of 1.9 percent year-on-year for the first quarter.

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Turnover in the second quarter was 18.4 percent higher than the second quarter of 2019.

Leasing activity also improved – 179 leases (renewals and new deals) were concluded in the first half of 2022.

A full interim distribution pay-out of 17.48 cents per share was declared, reinforced by a strong balance sheet, said Beattie.

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Challenges to the portfolio included double-digit increases in municipal and utility costs, increased periods of load shedding and a weak consumer environment facing an increased inflationary burden.

The portfolio occupancy level declined marginally to 92.9 percent in June 2022 (December 2021: 93.7 percent) with continued pressure in the office sector. L2D’s office exposure was low, making up 3.1 percent of the overall vacancy.

"Though not yet positive, we are seeing an improvement in the downward trend that has plagued rental renewals over the last few periods. Rental reversions across the portfolio were negative 16.3 percent, with retail renewals reverting at -15.6 percent and offices at -26.1 percent (retail -26.6 percent, office -21 percent).

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"There is usually a time lag between turnover improvement and improvement in lease renewals," said Beattie.

Financial director José Snyders said net property income increased by 10 percent to R272 million. Efforts to reduce costs were ongoing.

Several initiatives are already in place to reduce electricity consumption, including the most recent installation of a 1-megawatt solar roof plant at Liberty Promenade Mall. The centre’s carbon footprint will be offset by 2.3 tons of carbon dioxide each year.

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