One of the country's leading shopping centre owner-operators has seen more than 500 stores reopen nationwide over the past week as visitor numbers improve.
Vicinity Centres (ASX: VCX) CEO Grant Kelley says the retail environment remains unstable and management expects challenging conditions to persist for at least the next 12 months.
"However, we have been buoyed by Australia's resilience and the speed with which the pandemic has been contained," he says.
"Our teams are highly focused on ongoing recovery, and providing customers and retailers with the opportunity to return and reconnect to our centres in a safe manner.
"Over the past week, we have seen early signs of a recovery in centre visitation, as restrictions have begun to ease. Retailers who closed their stores voluntarily in prior months are beginning to reopen for trade, with 530 stores reopening in the past seven days."
A Vicinity spokesperson says this means 50 per cent of the 7,000 stores within its direct portfolio of centres are open, or 65 per cent of the portfolio gross lettable area (GLA).
To cope with the challenging situation Vicinity has reduced working hours for 70 per cent of its employees effective 21 April to 30 June, has cut directors' fees and executive committee salaries for the same period, and has either reduced or deferred variable and non-critical operating expenses.
"Vicinity entered this crisis in good shape. However, given the impact of government-mandated restrictions, and a heightened level of voluntary store closures, cost reductions across our business have become necessary," says Kelley.
"We have deferred all non-critical capital expenditure, including the proposed redevelopment of Chatswood Chase in Sydney, NSW."
He notes Vicinity is working with retailers to support them during this challenging period, with a particular focus on smaller retailers.
"Vicinity welcomed and supports the Federal Government's SME Commercial Code of Conduct and Leasing Principles During COVID-19 (the Code) and will continue to work with state governments as the Code takes legislative effect," he says.
"Our team adopted the principles of the Code immediately, in order to complement the measures already underway to support our retailers based on their individual circumstances."
He says good faith negotiations are taking place with retailers whose businesses have experienced a downturn as a result of COVID-19, and temporary arrangements will be accelerated to assist.
"Inevitably, our income at this time is being impacted negatively, however we agree with the Federal Government's sentiment that landlords and tenants have a shared responsibility to tackle the challenges brought about by these unprecedented times," says Kelley.
"We are working hard to balance the needs and responsibilities of all of our stakeholders, including our team members, our securityholders, our customers and the thousands of retailers in our centres, particularly our SME retailers.
"Our goal is to ensure the viability of our industry through to the other side of the pandemic. This relies upon both the continued sustainability of retailers, combined with the critical infrastructure of shopping centres, which collectively employ a significant number of Australians, and provide a broad range of essential and discretionary goods and services for our communities."
In a press conference this morning, NSW Premier Gladys Berejiklian emphasised she didn't want to see a situation where the economy opens only to shut again.
"We've seen in other countries around the world what they've done which hasn't worked, is have very severe restrictions, then have very open freedom and then they've had to go back to restrictions again - I don't want to see that happen in New South Wales," she said, noting the experiences of Singapore, Italy, Spain and parts of the United States.
"It's easier to shut things down. It's much harder to reopen and have normality because we need to make sure everything we do is COVID-safe, and I'm confident so long as every business follows the basic requirements of a COVID-safe environment, that retail will reopen.
"I just want to make sure all the hard work we've done doesn't evaporate because we took one hasty decision, just one hasty decision, which then allows all this hard work to go backwards."
Updated at 10:11am AEST on 6 May 2020.
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