No need for mall panic
AFIC believes Amazon fears overblown
INVESTORS are abandoning shopping centre landlords with too much haste in the panic over Amazon’s push into Australia, according to one of the nation’s most revered investment chiefs.
Major shopping centre owners such as Scentre, which owns Westfield centres in Australia, have been oversold in the stampede, Ross Barker says.
The chief executive of the Australian Foundation Investment Company – the nation’s biggest listed investment company – says investors are drawing premature conclusions from Amazon’s announcement that it will launch a full online store in Australia.
“Everybody’s said ‘Amazon’s coming in, it’s going to affect (these) retailers’,” Mr Barker said. “But you sit back and think, those iconic shopping malls, yes, they might have some challenges but do we think the current price is attractive for the medium-tolong-term? Probably.”
Australia’s listed shopping centre landlords have suffered deep market routs this year.
Scentre shares are down 11.4 per cent, while Vicinity Centres, which owns more than 80 centres – including a half stake in Australia’s biggest, at Chadstone – is down 12.4 per cent.
Westfield Corporation, which owns Westfield-branded malls overseas, has fallen further still, down 15.9 per cent.
Mr Barker said there was “no doubt” companies such as Amazon were changing the Australian Foundation Investment Company chief executive Ross Barker marketplace for consumers. But he said the “anticipatory fear” that had swept the market did not account for likely reactions from the competitors.
His comments follow reports last week the US-based online retail titan has settled on a site for its first distribution centre in Australia, at Dandenong, in southeast Melbourne.
Mr Barker said that on the available evidence, many investors appeared to be overreacting to the perceived threat.
“Generally speaking, people magnify the impact – certainly in the short term – but you’ve got time to adjust when you see what is happening on the ground once they start doing things.”
He was speaking as AFIC posted a net profit for the year to June of $245.3 million – down 7.7 per cent from $265.8 million the previous year.