MAS and Vukile will weather the storm
MAS, which was in the process of selling its malls in Western Europe to concentrate on growing its business in central and eastern Europe said in a statement yesterday that actions to preserve liquidity and enable staff to work from home were in place by March 6 at its malls.
The group said that given last week's rapid developments, including the first enforced mall closures in Bulgaria and Poland, and the growing recessionary risks, additional steps were put into effect.
“Consequently, the group has sufficient liquidity to comfortably meet its financial obligations and to see it through the period ahead, even if it would suffer significant revenue losses and postpone some, or all of its planned Western European assets sales for the 2020 calendar year,” MAS said.
Vukile announced a state of emergency in Spain on Friday, forcing all its stores to close for 15 days, except for pharmacies, supermarkets and some essential services. Vukile has a significant exposure in the country.
“These measures will have an impact on Vukile’s 82 percent-held Spanish subsidiary, Castellana Properties Socimi, which operates 6 shopping centres and 10 retail parks in Spain,” Vukile said.
MAS dipped 14.86percent on the JSE yesterday to R12.86, while Vukile eased 18.04percent to R9.63 on fears about the continuing spread of the virus.
On Sunday, South Africa declared a state of emergency, but there were no restrictions on shopping centre trading at this point.
“Given the fluidity of the situation, it is not possible to quantify with certainty the magnitude, duration and full impact that the Covid-19 pandemic may have on the group’s retail operations, especially in Spain,” Vukile said.
Castellana has already initiated an engagement process with affected tenants to ascertain the impact of the closures on their contractual lease obligations.
Where necessary, Castellana would consider suitable arrangements to assist affected tenants to manage the situation.
“Vukile and Castellana’s management are comfortable that both Vukile and Castellana have the required cash resources to meet their respective obligations to banks and other creditors for the period ahead.”
The Spanish government was expected to announce measures relating to financial support for companies and businesses negatively affected by the Covid-19 pandemic today, which might alleviate the financial impact of the emergency measures.
“Management remains confident the quality of both portfolios, which are underpinned by a diverse tenant base, strong balance sheets and healthy cash flows, provide the necessary foundation to manage through the Covid-19 challenges,” Vukile said.