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COVID-19: Shopping Centres Face Horror Time, Rent Relief Demands

The COVID-19 virus has seen shopping centres deserted with owners desperate to avoid having to shut down malls as retailers look for rent relief.

The introduction of tougher “social distancing” rules is tipped to hurt landlords whose customers are already witnessing a significant fall in traffic to their stores as consumers move to shopping online.

The potential of partial mall closures – while leaving open vital services such as supermarkets, pharmacies and clinics is set to affect several major shopping locations. Pitt Street Mall in Sydney was deserted yesterday.

Shopping centre owners including the likes of Vicinity, which co-owns Chadstone shopping centre, the country’s largest, and Scentre, which owns and manages Westfield malls in this country, are now rolling out extensive hygiene measures within their malls in an effort to stay open.

Another major issue is set to be retailers asking for rent relief.

The Financial Review claimed recently that ‘Even without the prospect of closures, landlords are already facing demand for rental abatement from some tenants as foot traffic tapers off in some malls.

The portion of stock in Unibail which is traded on Australian Securities Exchange plunged 22.8 per cent, or $1.36, to close at $4.60 on Tuesday following the announcement the night before.

“Considering the uncertainty around this rapidly evolving situation and how long the above preventative measures will need to remain in place, it is not currently possible to estimate the extent of the impact on the group’s earnings,” Unibail said.

Vicinity fell 3.9 per cent, while its rival Scentre dropped 7.7 per cent on Tuesday following the Unibail announcement.

“Given the current situation, we are seeing slightly fewer visitors at our destination assets – particularly as these assets typically benefit from strong visitation from international and domestic tourists,” a Vicinity spokeswoman said.

Another problem is that a move to “experiential” uses in malls in a bid to combat the challenge posed by online retailing is set to cause problems for shopping centre owners with shared space potentially being ruled out-of-bounds under stricter codes of social distancing.

Operations deemed essential – supermarkets and health services – would remain open.

Scentre has declined to comment on any contingency plans it may have formulated for partial closures.

Jefferies analyst Sholto Maconochie told the AFR that landlords could expect to see further insolvencies among exposed retailers and increased demand for rental relief from specialty tenants as well as food retail.

Mr Maconochie expects more major listed players to withdraw their guidance in the current conditions.

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