L2D bouyed by Sandton City
Liberty Two Degrees (L2D) a landlord with exposure to some of SA’s premium shopping centres, including Sandton City, Melrose Arch and Eastgate has pulled off positive trading density growth across its retail portfolio despite the plight of high-profile tenants such as Edcon, Forever 21 and Hamleys.
Liberty Two Degrees (L2D) the landlord with exposure to some of SA’s premium shopping centres including Sandton City, Melrose Arch and Eastgate has pulled off positive trading density growth across its retail portfolio despite the plight of high-profile tenants such as Edcon, Forever 21 and Hamleys.
L2D s portfolio recorded trading density growth of 3%, with Sandton City 8.4%, in the year to end-September. Trading density is the turnover generated per rentable square metre in a shopping centre.
This is an improved performance relative to the December 2018 growth of 2.9% and above the 2.8% reported in June 2018.
Vacancies across the portfolio were only 1.8%, falling from 2.4% at the end of June, while at Sandton City it was 0.6%. The average national retail vacancy factor was 4.3% according to the SA Property Owners Association (Sapoa).
Growthpoint Properties, SA’s largest real estate company, said last week that the vacancy factor at its retail portfolio worth R29.8bn was 3.9%.
L2D, which was formed by financial services group Liberty to hold about a third of its property portfolio, says Sandton City has been its standout performer in 2019 and that upgrades at the shopping centre over the past five years are bearing fruit.
“L2D continues to deliver operational growth despite a depressed domestic economy that continues to exacerbate subdued levels of confidence in the real estate sector,” CEO Amelia Beattie said.
To mitigate risk on the portfolio, L2D monitors tenant performance. In recent months, clothing retailers Edcon and Forever 21, as well as toy store Hamleys, have been under financial distress leading to reduction in space and closing of some stores.
L2D reduced its Edcon exposure to below 4% of the total gross leasable area across its assets. The retailer is being restructured and as part of its bid to save the business it reached an agreement with some landlords to pay a fraction of its rent.
US fast-fashion group Forever
0.6% The vacancy factor at Sandton City, compared to the average national retail vacancy factor of 4.3%
21 said in October it was filing for voluntary chapter 11 bankruptcy, becoming the latest US bricks-and-mortar group to embark on restructuring as it competes with online retailers.
Forever 21’s store in Sandton is managed by a Dubai-based franchisee and represents 0.27% of L2D’s total portfolio gross leasable area, said Beattie.
She added that L2D’s exposure to Forever 21 is limited to a single store.
“The store is currently open and trading as normal and will close at the end of April 2020. A number of replacement tenants have been identified as this is a high-traffic area of the mall,” Beattie said.
Toy store Hamleys went into business rescue in early 2019. The rescue process was concluded with new owners Rand Outfitters and Osbro taking over after the previous owner had absconded.
An acknowledgment of debt for a portion of the arrears at Sandton City and Eastgate Shopping Centre was signed and the new owners are now operating the stores.
“We continue to seek recourse against the previous owner,” L2D said.