Covid-19: Major mall owners hammered on the JSE

Several of South Africa’s biggest listed property funds that are either predominantly retail-focused or have large retail portfolios locally and/or offshore were among the biggest losers on the JSE on Monday, plunging in the double digits.

This was well before President Cyril Ramaphosa delivered his latest Covid-19 address to the nation at 20:00, in which he announced a national lockdown on non-essential services that comes into effect at midnight on Thursday, March 26. The full lockdown is likely to have further ramifications for retail landlords, the hospitality sector and other businesses.

Hyprop, which owns Rosebank Mall in Johannesburg and Cape Town’s Canal Walk, plummeted 27.14% to record a low of just R20 a share after it put out a Sens statement on the possible impact of Covid-19.

‘Extraordinary time’

Redefine, the owner of Centurion Mall and Maponya Mall in Soweto, tumbled 26.36% to a record low of just R1.62. This came after the group said in a Sens statement earlier on Monday that it is postponing its interim dividend payment and withdrawing its distribution guidance for the year in what it described as an “extraordinary time of uncertainty”.

The group’s share price has lost some 52% of its value over the last week alone.

Vukile Property Fund, which owns several regional malls across South Africa and in Spain, was another big loser – down 17.54% to just R6.30. Its share price is down almost 39% in the last week.

Both Hyprop and Redefine also have offshore exposure in Europe, which has been even more hard-hit by the global pandemic.

Attacq, which owns Mall of Africa in Midrand as well as property interests in Europe, plunged 19.54%.

Biggest drop

The SA Real Estate Investment Trust (Reit) that nosedived the most on Monday was embattled Rebosis Property Fund’s ‘A’ share, which lost 72.5% on the day to 22 cents a share. However, its share price has been trading below R1 since mid-February largely due to its own internal debt levels.

While Rebosis no longer has interests in the UK, locally its well-known regional shopping centres include Baywest Mall in Port Elizabeth and Hemingways Mall in East London.

Other local Reits with large retail portfolios that plunged by double digits on Monday on the JSE include:

• Octodec, down 43.11%
• SA Corporate, down 21.77%
• Growthpoint, down 17.15%
• Arrowhead Properties (B), down 16.2%
• Dipula (B), down 15.73%
• Accelerate Property Fund, down 15.25%
• Emira, down 14.56%
• Fortress (B), down 13.46%
• Resilient, down 13.14%
• Investec Property Fund, down 10.83%

Speaking to Moneyweb, Keillen Ndlovu, head of listed property funds at Stanlib, says the South African listed property sector has lost over 50% of its value for the year to date.

“Historic yields are now over 18% and discounts to NAV [net asset value] exceed 60% on average.

“These are the worst numbers we have ever seen in the South African listed property sector,” says Ndlovu.

He points out that distribution growth will “unfortunately be negative over the next 12 months”.

This will be the first time the listed property sector delivers negative growth.

“It is important to highlight that the property stocks that have postponed paying out their distributions or dividends – such as [Polish retail property giant] EPP, Hyprop and Redefine – have relatively higher debt levels or stretched balance sheets.

“We may see a few more stocks in similar positions announce this move [postpone paying out distributions],” he says.

Ndlovu adds that more dividend cuts will be on the cards for South African Reits going forward, post the lockdown announcement due to further declines in earnings. He says the UK has also just announced a three-week lockdown similar to SA’s, which will also impact funds there such as Growthpoint-owned Capital & Regional, Hammerson and Intu.