Shopping centres positive despite kikki.K closures

A Kikki K store.
A Kikki K store.

Shopping mall owners say the collapse of stationery chain kikki.K will not dent profits, despite a summer retail season littered with retail chains going bust.

Top retail landlords have been hit by the luxury stationery brand’s collapse, which has highlighted the dire state of the retail market and greater financial pressures on specialty tenants.

The company announced late on Tuesday that it had been placed into receivership with its chief executive saying the economic slump had slammed retailers.

Its collapse followed a slew of shopping mall retailers including Harris Scarfe, Jeanswest and Bardot being placed in voluntary administration since last December.

The growing list of failed retail chains is likely to put greater stress on rental spreads at a time when existing tenants may also demand temporary rental relief or further cuts to rental obligations.

Kikki.K’s collapse has hit landlords including the Scentre Group, Vicinity Centres, GPT Group, Lendlease, Stockland, QIC and AMP Capital, as well as private investors who hold stakes in prime centres across the country.

According to Kikki.K’s website, the company has 59 stores across all states and 450 employees.

Local Westfield owner Scentre has the largest exposure to the Swedish-style stationery company, having about 16 stores within its portfolio.

A Scentre spokeswoman says the shopping landlord does not comment on commercial arrangements with its partners or potential impacts on its shopping mall occupancy rates.

Chadstone co-owner Vicinity Centres says it had eight stores within its portfolio, which represented less than 0.1% of total portfolio income.

A Vicinity spokeswoman says it had been working with the failed retailer ahead of the announcement and that its properties’ store locations are in demand.

GPT confirmed it had six kikki.K stores in its portfolio, while Stockland said it had one store and one kiosk. Lendlease and Mirvac have three stores each within their respective portfolios and AMP Capital has exposure to two kikki.K stores.

Investment brokerage Citi’s Australian property team this week said half-year earnings results further confirmed a weaker operating backdrop for retail REITs.

Citi’s analysts say challenging outlooks were driven by shopping centre book values and leasing spreads falling.

They said Vicinity Centres and Scentre had full-year profit forecasts below expectations.

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