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Earnings

Australia's Scentre Group swings to $2.6 billion loss as virus hits rental income

SYDNEY (Reuters) - Scentre Group SCG.AX, owner of Westfield-branded malls in Australia, posted a A$3.6 billion ($2.6 billion) interim loss on Tuesday after lowering the value of its assets due to challenges faced by its retail tenants amid the coronavirus outbreak.

The owner of 42 Westfield malls swung to a net loss for the six months to June 30 from a net profit of A$740 million in the year-ago period, due to a A$4.1 billion downward revaluation of its assets.

“We acknowledge that this has been a difficult time for our customers and our retail partners,” Chief Executive Officer Peter Allen said in a statement.

The Sydney-listed company, which split from the global Westfield chain in 2014, said it had formed agreements which enabled its small to medium enterprise tenants, which account for about 30% of its rental income, to cut their rent in line with sales declines caused by mandatory COVID-19 closures.

The company had collected 70% of its gross rental billings for the first six months, rising to over 80% in June and July, it said.

Australia began a shutdown of most nonessential public activities in March to contain the spread of the virus which has so far been linked to 525 deaths in the country. Although most of the country’s states have since relaxed restrictions, brick and mortar retailers of non-discretionary goods have been among the worst hit sectors.

Scentre said it also took a A$232.1 million credit charge relating to COVID-19. Overall revenue fell 16% to A$1.1 billion, while “funds from operations”, which the company says is an important performance indicator, fell 46% to A$361.9 million.

Scentre did not declare an interim dividend, as previously flagged.

Reporting by Byron Kaye; Editing by Kim Coghill and Rashmi Aich

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