CAPE TOWN - Retailers were facing the brunt of the Covid-19 virus impact on the business world globally, and it was too early to ascertain the longer-term impact on the industrial and office property sectors, Investec Property Fund (IPF) chief Andrew Wooler said yesterday.
Four real estate investment trusts (REITs)- IPF, intu, Capital & Counties and Stenprop - yesterday updated shareholders how their portfolios were effected by the disruption to consumer spending, closure of borders and travel restrictions as well as the slowdown in economic activity that has followed the pandemic in South Africa and in several developed markets.
Wooler said in a presentation that with most of IPF’s portfolio in retail, mainly in South Africa, management were dealing “hands-on” with the crisis every day, meeting with mostly small and medium sized specialist retail tenants on a one-on-one basis, businesspeople who had already been struggling financially due to the weak economy.
“We are not sure when consumers will return to normal consumption,” he said. “At this stage the office and industrial assets in our portfolio have been marginally affected,” he said.
IPF’s pan-European logistics operations were being affected by border closures and travel restrictions. Many government support programmes had been announced by countries in Europe, and IPF’s participation was being assessed.
Wooler said there had been a “massive uptick” in logistics inquiries in Europe the past two weeks from businesses with overflow stock and occupiers that needed additional space with the growth of online businesses.
intu said all its shopping centres in the UK and Spain were semi-closed - it owns several of the leading malls in the UK.
In addition, only 29 percent of rent had been received for the second quarter, which had been due on March 25.
On government advice in both countries, only essential stores, such as supermarkets, pharmacies and banks, were open at intu’s shopping centres.
“We are in discussions with our customers on the outstanding rents. For the same period last year, we had received 77percent on the quarter day.” intu was considering accessing the UK government’s £330 billion (R6.79trillion) support package.
Capital & Counties said most of its retail and food and beverage units on the Covent Garden estate in London were closed temporarily, and while government support measures would be helpful for many occupiers, “Capco expects disruption to income this year.”
Working to assist customers on a case by case basis would involve moving from quarterly rental payments in advance, to alternative arrangements, and the deferral of rental payments in certain cases, to ease short-term cash flow issues and to reopen successfully once restrictions are lifted.
Capco said it had a strong balance sheet with access to substantial liquidity and much headroom against debt covenants.
Total cash was about £250m with a further £120m to be received from the Earls Court sale, while it also had access to more than £700m of committed undrawn facilities.
intu said that it had cash and facilities of £184m available at March 24. The impact of Covid-19 was delaying regulatory approvals for the sale of intu Puerto Venecia in Spain, and the £95m proceeds were only expected to be received mid-May, at the earliest.
Stenprop, which is fast growing into the UK Multi-Let Industrial (MLI) property sector, said it was well placed to weather prolonged uncertainty as it had large cash balances and leverage was low.
About 57percent of the portfolio (by value) comprises 70 MLI estates, spread across the UK, with more than 850 tenants in a wide range of businesses.
“It is too early to say with any accuracy what the impact will be for these occupiers, although clearly some sectors are more directly impacted than others,” Stenprop directors said.
Some 18 percent of its portfolio comprises three daily-needs retail centres in central Berlin, which were anchored by strong food retailers, and five retail warehouses in Germany, which are let to a bike and ski business.
About 13 percent of the portfolio comprises Trafalgar Court, the largest office building in Guernsey, mainly let on a long lease to Northern Trust, with more than eight years remaining.