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One of Australia's leading shopping centre owners is collecting more cash from tenants as total sales across its portfolio edge tantalisingly close to pre-COVID levels, with growth coming from discount department stores, supermarkets and the mini majors.
Vicinity Centres (ASX: VCX), which owns 58 retail centres valued at $12.96 billion, reported a 77 per cent visitation rate in the March quarter versus the same period in 2019; a more meaningful comparison in light of the onset of the pandemic and lockdowns in March 2020.
It is a comparison that has stayed steady at the same rate since the December quarter, while outside of CBDs the rate has increased by one percentage point to 83 per cent of 2019 levels.
Meanwhile the level of cash collection is at 82 per cent of the pre-coronavirus rate, up two percentage points on the December quarter and significantly higher than the 68 per cent comparative rate in the September quarter.
But one of the most promising signs from the retail property giant's update today is the fact portfolio retail sales in March were down by only 2.3 per cent on March 2019 - a massive uptick compared to the 12.3 per cent shortfall in the December quarter.
This is encouraging news for the Melbourne-headquartered group whose statutory net loss ballooned to $394.1 million in the December half, plunging due to a net property valuation loss of $572.4 million.
Vicinity clarifies visitation numbers are in fact growing even though the comparison versus 2019 appears steady.
Most importantly, the figures show retail sales improvement is greater than visitation growth, highlighting that consumers are spending more per visit with average spend up by 23 per cent in March 2021 versus March 2019.
Vicinity believes strong spend per visit in conjunction with increased centre visitation may be a positive lead indicator for continued recovery.
"After a challenging 12 months, we are seeing signs of recovery, with improved centre visitation and retail sales during the quarter," says Vicinity's chief executive officer and managing director Grant Kelley.
"Whilst overall retailer confidence remains fragile, retailers are increasingly committing to new leases versus previous quarters which is encouraging.
"However, as the recent quarter has demonstrated, risks of further disruptions from snap lockdowns remain, while tourism and the timing of office workers returning to CBD offices is uncertain."
Kelley emphasises the Vicinity leadership is focused on continuing to navigate the risks and uncertainties whilst managing the business for the long term.
"Today's announcement shows that signs of recovery are emerging," he says.
"Federal and State governments continue to contain the virus successfully, and Australians are returning to their favourite retail destinations with capacity to spend.
"While risks of further disruption remain, Vicinity will continue to adapt and support our retail partners while maintaining our focus on long term value creation."
On a state-by-state basis, Vicinity's portfolio sales in several parts of the country was already higher than 2019 levels in March, with South Australia leading the way with an 11.1 per cent increase, followed by Tasmania (10 per cent), Western Australia (4.8 per cent) and Queensland (2.2 per cent).
New South Wales was down 9.6 per cent on March 2019, although ex-CBD it was just 0.2 per cent less, while Victoria was down 6.5 per cent.
Nationwide, excluding CBDs and Victoria the total sales were up 4.5 per cent.
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