Landlords pull guidance, cut distributions

The stark impact of the coronavirus on retail property is being laid out as landlords globally cut back distributions

Aventus and Unibail-Rodamco-Westfield are recalibrating citing unprecedented circumstances brought on by the coronavirus.Picture: AAP

The stark impact of the corona­virus on retail property is being laid out as landlords globally cut back distributions, with Brett Blundy’s local operation, Aventus, trimming its quarterly payment.

Meanwhile, the French owner of the international Westfield ­empire, Unibail-Rodamco-Westfield, cut its payment in half, as lockdowns are imposed across Europe and the US.

Both companies dumped their guidance for the year, citing unprecedented conditions arising from the coronavirus, saying they faced uncertainty in dealing with the crisis.

Mr Blundy has signalled a cautious approach, with the Aventus property fund he founded cutting back its quarterly distribution to just a quarter of previous levels.

Mr Blundy, who is also one of the country’s most successful retailers, has a stake of about 29 per cent in the trust that owns about $2bn worth of centres that focus on selling essential items.

Everyday-needs tenants make up the largest category but that is followed by furniture and homewares, where demand may fall. But Aventus has no department stores and minimal fashion and apparel.

Mr Blundy is also major shareholder in listed jewellery chain Lovisa, which has a near 450-store network globally that has been hit by the crisis. He has also has stakes in homewares group Adairs and Accent Group,

Aventus said the operating performance of its portfolio up to the escalation of the COVID-19 pandemic had been solid and the group’s balance sheet remained robust, with no debt expiring before May 2022 and over $100m of cash and undrawn facilities.

“However, in light of the increasing uncertainty concerning the impact of COVID-19 on ­society, the economy and retailers, the board has adopted a conservative approach for the March 2020 quarter distribution,” the company said.

The distribution of 1.065c per unit was equivalent to 25 per cent of distributions paid last quarter with the cut made to further improve the group’s capital position.

“The board has not taken this decision lightly but believes it is in the best interest of the group to preserve liquidity at this point in time,” Aventus said.

The company also followed other retail landlords in dumping guidance on the back of uncertainty concerning COVID-19.

Mall companies Scentre and Vicinity Centres, as well as Stockland, GPT and Mirvac, have dumped guidance over the last week.

Meanwhile, Unibail-Rodamco-Westfield, which took over the international Westfield empire in 2018, has been sold off heavily as it deals with mall closures.

Unibail has already closed many of its European and US centres but local centres owned by the likes of Scentre and Vicinity have been classified as an essential services by Prime Minister Scott Morrison.

However, many individual stores are closing as they cannot operate with the tough social distancing restrictions and fall-off in trade causing them heavy losses.

Malls have responded by providing relief and trying to ensure that tenants remain solvent through the crisis in the hope that they will eventually trade out of it.

Unibail will maintain its first-half distribution per security payment of €5.40 ($9.84) per share, to be paid in March, but is cancelling payment of its second fiscal 2019 dividend payment. It will provide an update when it can reliably ­estimate the effects of COVID-19.

Unibail has good balance sheet liquidity with €10.2bn, and this increased to €11.7bn once the sale of some French malls is taken into account.