SCA Property Group has posted a lower full year statutory net profit of $85.5 million due to the impact of COVID-19 on earnings, as the group provided rental assistance to over 600 tenants.
The statutory net profit is down by 22% compared to last year, primarily due to COVID-19 earnings impact of $20.5 million, and property valuation decrease of $87.9 million.
Funds from operations declined by 0.7% to $140.8 million, FFO per unit was 14.65 cents per unit, down by 10.3% compared to last year. FFO adjusted for maintenance capex, incentives and leasing costs fell 2.4% to $124.3 million.
The trust announced a distribution of 12.50 cpu, down by 15.0% compared to last year.
CEO Anthony Mellowes said the throughout the pandemic, the group’s convenience-based centres have been relatively resilient.
“Our anchor tenants have experienced strong sales growth, turnover rent has increased and we have continued to conclude leasing deals with 75 renewals and 55 new lease deals completed during the COVID-19 period of March to June 2020. Specialty vacancy is stable at 5.1%, specialty occupancy costs are stable at 10.0% and approximately 92% of tenants are now open and trading including approximately 63% in Victoria,” he added.
Supermarket moving annual turnover growth was 5.1%, up from 2.0% as at 30 June 2019 and discount department store MAT growth was 7.6%, up from 2.2% as at 30 June 2020.
Despite COVID-19, SCA saw increased leasing activity in FY20 with 232 renewals (FY19: 215 renewals) and 146 new lease deals (FY19: 87 new leases). Average specialty tenant leasing spreads during the period were negative with average renewals at -1.1% and new leases at -7.7%.
“Nevertheless, the COVID-19 pandemic has impacted many of our specialty tenants who have experienced sales declines. We have provided rental assistance to over 600 tenants in accordance with the Mandatory Code of Conduct. Our rental collection rate was 77% during the COVID-19 period, and we will continue to pursue payment from tenants of all of the outstanding amounts not covered by agreed waivers or deferrals,”
Mellowes said the group’s focus continues to be to improve the tenancy mix in its centres with a bias toward non discretionary categories, to maintain high retention rates on renewals, and to maintain low specialty vacancy by working pro-actively with tenants in these challenging times.
The trust’s investment property portfolio declined by $8.8 million to $3,138.2 million since 30 June 2019, due to like-for-like valuation decrease offsetting acquisitions. Net tangible assets of $2.22 per unit as at 30 June 2020, down by 2.2% from $2.27 as at 30 June 2019 primarily due to the like-for-like valuation decrease.
Mellowes said the primary focus in FY21 is to ensure that its centres emerge from the COVID-19 pandemic in a strong position, with sustainable tenants paying sustainable rents.
“This may mean continuing to offer waivers and deferrals to tenants that are part of our long-term tenancy mix plans, that leasing spreads may remain negative and that lease incentives may remain elevated.
“Due to the continued uncertainty created by the COVID-19 pandemic, we will not provide FY21 guidance at this time. We will continue to target a Distribution payout ratio of approximately 100% of AFFO,” he concluded.