Retail continues to drive Liberty Two Degrees
Liberty Two Degrees (L2D), coowner of Sandton City, Africa’s iconic shopping centre, has reported improved operational performance across its portfolio despite economic headwinds.
The company said innovative leasing strategies saw its portfolio occupancies reach more than 93% by the end of April, driven by its office and hospitality portfolio.
The fund maintained its 2023 financial year distribution growth guidance of 0%-8%.
“Economic headwinds, increased load-shedding and reduced consumer disposable income will have a negative effect on operational performance,” the company said in a pre-close investor update on Wednesday.
JSE-listed L2D co-owns predominantly retail focused assets, including a stake in Nelson Mandela Square, as well as offices and hotels.
Turnover rose 7.8% in the first quarter of 2023 with portfolio occupancies reaching 93.4 %. Retail occupancies were near 98% and offices more than 80%.
CEO Amelia Beattie said complementary offerings continued to benefit the retail portfolio, which is experiencing a steady growth in footfall and turnover.
Retail categories including food service, luxury brands, grocery/supermarket, health and beauty, accessories and speciality were above benchmark trading density levels.
New tenants signed up during the period include Helly Hansen, Café Coton and La Parada. Beattie said retailers are increasingly investing in their stores through expansions or refurbishments, including Zara in Sandton City, and Queenspark, Sissy Boy, The Body Shop, Vodacom, FNB and
COMPLEMENTARY OFFERINGS CONTINUED TO BENEFIT THE RETAIL PORTFOLIO
iStore at other malls.
The fund renewed nearly 19,000m², down from over 44,000m², with reversions of 5.6% from -10.4% in 2022. Total renewals amounted to 62, of which 51 were retail at -1.3% reversions, and 11 offices at -20.6% reversions. Tenant retention was down to 76.9% from 84.8%. Between JanuaryApril, the weighted average lease escalation for renewals was 6.4% and 6.5% for new deals.
L2D also reported a good rebound and occupancy at its Sandton hotels. During JanuaryApril, Sandton Sun occupancies reached 73.5% from 68.4% in 2022, Garden Court occupancies increased from 35.8% to 61%, Sandton Towers recorded 47.6% and the Sandton Convention Centre increased the number of events from 47 to 67 during this period.
At end-April, L2D’s loan-tovalue was 24.42%, little changed from 24.37% in December, with average debt expiry down to 3.09 years from 3.42 in December.