GPT reveals shopping mall slump

Landlord the GPT Group is putting retail and office projects on hold after a dramatic fall-off in business at virus-hit malls.

Malls have been shut or emptied by the coronavirus crisis. Picture: AAP

Diversified property landlord the GPT Group has revealed a dramatic fall-off in its shopping centre business in March and has put key retail and office projects on hold in Sydney and Melbourne as it looks to combat the coronavirus crisis.

The update is one of the first by a major property company and comes as it is also dealing with stressed tenants chasing rent relief, both under the Morrison government’s commercial property code, and those outside its range.

But in a sign it is unlikely to tap the market for equity, GPT has $1.27bn of available liquidity in cash and undrawn bank facilities, with less than $5m of debt maturing through to December 2021.

The company pulled its earnings and distribution guidance in March and said it would get all its investment properties independently valued at June 30.

GPT said before the COVID-19 struck, retail sales had shown positive momentum with monthly combined specialty sales up 3 per cent in January and up 4.9 per cent in February on a year-on-year basis.

But the mid-March measures to contain the coronavirus slashed foot traffic and many stores closed. Monthly combined specialty sales plunged by 27.3 per cent and overall centre monthly sales were off by 21.3 per cent. Supermarkets, by contrast, surged and monthly sales were up 19.7 per cent.

GPT has deferred commencement of its Rouse Hill retail expansion in Sydney and of the Melbourne Central office and retail development - which was to include one of the country’s largest timber towers - “until such time as market conditions are more supportive”.

The company said the virus meant that most of its office tenants had switched to working from home. While most will return, the focus is on rent talks with small businesses. They account for 36 per cent of retail income, 21 per cent of office income and 14 per cent of logistics.

“We are engaging with our tenants in a proactive and considered way so that we can all emerge from the pandemic in a position to grow our respective businesses,” GPT chief executive Bob Johnston said.

GPT has cut executive pay, withdrawing its 2020 short term incentive compensation scheme and the 2020–2022 long term incentive scheme.

The company had positive leasing results during the first quarter in its office and logistics portfolios. The logistics properties are almost fully occupied and two industrial developments were completed at Berrinba in Brisbane along with another in Yennora in Sydney.

In funds management, GPT’s office fund has received commitments for about $289m and also amalgamated a future development site on George Street, Parramatta.