The decision by the federal government to allow Australians to access up to $20,000 of their superannuation has delivered two surprises. Superannuation minister Jane Hume reveals that in the first batch of withdrawals a great many Australians have taken out what they believe they need rather than the full $10,000 first instalment entitlement — they clearly value their super.
And second it has forced all superannuation funds, but particularly some of the industry funds, to look hard at the source of their money flows and at the value of their non listed assets .
For many funds the biggest surprise of all was just how far the real value of their non- listed shopping centre investments had fallen. At least one fund tried to sell a holding and was shocked at the offers that were put on the table.
This weekend the trustees of superannuation funds have one last chance to lower their non-listed asset values before the money starts to flow to members next week.
Some funds have wisely undertaken really extensive valuations but some may have left their head in the sand. And the big law firms are waiting to pounce on those who leave inflated values in place, firstly because of the fall in the value of listed Australian retail shopping centres and secondly because what is happening in the US is set to spread to Australia.
Department store departures
The cornerstone of many of the bigger US malls, department stores are closing. The New York Times Is calling it “the death of the department store”. They were struggling before the virus but now JC Penny is close to bankruptcy as the company failed to make a $US2 million interest payment. The biggest department store of them all, Macy’s, was forced to grant leave of absence to most of its workers by closing locations.
And a string of other department store chains face the same disaster. In the total retail market UBS is expecting 100,000 stores to permanently shut between now and the end of 2025. This is a crisis for the malls because most US mall rental agreements say if less than 80 per cent of space is occupied in a mall or if a major, anchor tenant like a department store or supermarket closes then other tenants are allowed either a rent reduction or an early termination right.
Many malls in Australia have similar clauses. Some malls in the US may simply be forced to close particularly as online shopping’s share of the market looks set to rise from 15 to 25 per cent.
The Lowy family by establishing the massive Westfield Malls changed the face if retailing in Australia and had a big impact on the US. The Lowy family exited at the top of the market as they saw the growth of on line shopping. But even Frank Lowy could never have predicted the carnage the combination of the COVID-19 virus and online shopping would have on the shopping centre industry
And in the US just to top it off America’s meat supply might be in jeopardy as workers at slaughterhouses and meat processing plants are diagnosed with COVID-19, leading to closures across the country.
And the largest provider of pork in the US is owned and held by a corporation based in China.
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