Virus closures drive Scentre’s $3.6bn hit

THE owner of Westfield shopping centres in Australia has incurred a major financial blow, with the economic downturn induced by the coronavirus pandemic taking a swipe at its profits by more than $3bn.

Releasing its half-year results on Tuesday, Scentre Group said its interim profit had plummeted because of the impact of COVID-19 denting the value of its property assets by $4.1bn.

For the six months ending June 30, the company posted a statutory loss of $3.6bn, an almost $4.4bn financial slide compared to its 2019 mid-year results.

The shopping mall landlord has also been hit by a significant number of rent-relief claims from tenants who had to close during lockdown.

Rental negotiations have adversely affected the group’s operating earnings and cash inflows over the period, with rent collections for the June quarter down 48 per cent.

For the first of half of 2020, Scentre Group’s operating earnings were $361m, a fall of $281m on the previous corresponding period.

Scentre chief executive Peter Allen said the company had agreed arrangements with 2438 of 3600 retail partners and had provided tenants with about $1.6bn in support since the pandemic took hold.

“We acknowledge that this has been a difficult time for our customers and our retail partners,” he said.

“We have supported our retail partners throughout this period on a case-by-case basis.”

Total revenue over the period was down 16 per cent on the same period in 2019 to $1.1bn. Moody’s Investors Service said

Scentre’s financial situation was likely to further deteriorate, with lower expected fullyear earnings likely to affect its credit rating.

“We expect Scentre’s credit metrics will deteriorate materially in 2020, given increased net debt, reduced asset values and our expectation for significantly lower full-year earnings,” Moody’s vice-president Matthew Moore said.

The company said it had $4.4bn in available liquidity, which was sufficient to cover all debt maturities until 2023.