Westfield owner’s share price bounces back in face of coronavirus
Westfield owner the Scentre Group has received a share market boost after announcing it has secured more bank facilities in a move that lifts its liquidity position to $3.1 billion over the next two years.
Scentre and rival mall owners including Vicinity have been under pressure as national chains shutter their stores and some refuse to pay rents, with hundreds of smaller operators also unable to pay rents as their businesses are hit by the coronavirus.
But the retail landlord’s shares were up 12.5% to $1.76 after it said it had obtained more support from its lenders.
Scentre Group’s (A2 negative) announcement that it has obtained additional unsecured bank facilities supports its ability to navigate the unprecedented challenges facing the group and its tenants
Scentre says that in light of the COVID-19 pandemic and its impact on capital markets globally, it has obtained additional unsecured bank facilities that increase the group’s available liquidity position to $3.1 billion as at April this year.
The additional facilities have a two-year duration and provide the group with further funding flexibility over the coming period. The group has $2.5 billion of bonds and bank facilities maturing through to the end of December.
Moody’s Investors Service vice president Matthew Moore notes Scentre’s announcement that it has obtained additional unsecured bank facilities.
“Scentre Group’s (A2 negative) announcement that it has obtained additional unsecured bank facilities supports its ability to navigate the unprecedented challenges facing the group and its tenants,” he says.
The increase in the group’s liquidity to $3.1 billion from around $1.8 billion as of December 2019 also demonstrates Scentre’s strong access to capital, and helps reduce refinancing risk through 2021, he added.
“But while its improved liquidity position removes some risk, we expect further deterioration in the retail environment from the coronavirus pandemic will pressure Scentre’s revenue, income and leverage metrics,” Moore says.
Moody’s published on Tuesday affirming the group’s A2 / P-1 issuer ratings, but revising the rating outlook to negative from stable.
Macquarie analysts say the announcement means that Scentre has got $1.5 billion of new facilities this year and they will expire over the next two years.
The group has $2.5 billion of bonds and bank facilities expiring in December 2021. The new facilities provided enough headroom to resolve these if required but it gave the market comfort about an upcoming bond expiry in April 2021 that was previously a key point of contention.
“This announcement is positive in isolation as it resolves one of the issues associated with its balance sheet. Conditions in malls remain challenging with underlying tenant covenants under question,” Macquarie analyst Darren Leung says.
But he said that Australia closing shopping centres and other public venues more broadly remained a key risk and there was downrisk to Scentre’s distribution.
This article originally appeared on www.theaustralian.com.au/property.