SA’s love of shopping is likely to cushion L2D

The exposure of Liberty Two Degrees (L2D) to the high-end shopping jewels of SA looks set to see the property fund through a challenging 2020 and 2021.

L2D owns portions of the iconic shopping centre Sandton City as well as luxury retail and office multipurpose commercial asset Melrose Arch and the 40-year-old Eastgate Shopping Centre.

Like many of its peers, the landlord’s rental collections have come under pressure as the bulk of its tenants couldn’t trade during the first two months of the coronavirus lockdown.

But this will change now that the country is at level 3 restrictions. Many retailers are opening, with health and social distancing protocols in place.

Rental collections based on the full amounts due across the company’s portfolio totalled 38% in April. May collections received by May 25 rose to 45% of current billing.

CEO Amelia Beattie is right to be optimistic as South Africans across the class spectrum flock to shopping centres every weekend.

Sandton is even more resilient given that it attracts daily trade from office workers and staff of the retailers in the centres.

L2D listed to give investors the opportunity to get exposure to high-end malls, and while a global pandemic may cause a shock to the economy, these retail centres won’t lose their popularity overnight.

COMMERCIAL SPACE TRAVEL

The commercialisation of human space flight has reinvigorated US plans for space exploration. First the International Space Station (ISS), then the moon. One day, perhaps, Mars.

Planned missions have been delayed, but SpaceX’s Crew Dragon capsule, launched on a Falcon 9 rocket, has become the first privately owned vehicle to take Nasa astronauts to the ISS.

Boeing is expected to be about a year behind.

A sustainable commercial market for space travel could fund future exploration. In the past decade the price tag for reaching low Earth orbit has declined by a factor of 20, according to research analysts at Nasa. Nasa’s space shuttle cost about $54,500/kg to reach low Earth orbit.

SpaceX’s Falcon 9 advertises a cost of $2,720/kg. Launch costs to reach the ISS have declined by a factor of four.

There are cheaper ways to leave gravity behind. It costs about $12,000 to take a ride in a Russian MiG-29 jet and see the curvature of the Earth.

Spanish company Zero 2 Infinity claims it will launch a stratosphere travel programme in 2021 that will take tourists 32km above the Earth in a specially designed balloon for €125,000. Those who want to go further can expect to spend millions.

But shuttling people between space and Earth is not where SpaceX expects to make most of its money. Valued at $36bn, according to PitchBook data, the company’s profits are expected to come from satellites that beam wireless broadband services around the world.

In the $360bn global space economy, broadband satellites make up the fastest-growing sector, according to data from the Satellite Industry Association. What is a $2bn market today could reach $95bn within the next two decades, writes the Financial Times.