“Our supermarket-anchored centres are resilient, with the supermarkets and many of the specialty tenants trading strongly,” Mr Mellowes said.
All but one of its 85 neighbourhood or regional shopping centres are anchored by Coles or Woolworths. Both supermarket giants are seeing substantial growth and make up almost 50 per cent of SCA’s gross rental income. “Our centres are benefiting from the elevated foot traffic being generated by these anchor tenants over recent weeks,” SCA said.
The company, however, is not immune from the coronavirus downside, just shielded from some of its worst effects. Some tenants – gyms, cinemas, massage, beauty, tanning salons and nail bars – have been required to close indefinitely but they represented just $1 million per month of SCA’s gross rental income. Cafes and restaurants, which can still offer takeaway services, made up only $700,000 of its gross rental income.
Combined, the gross rental income from all COVID-19-affected tenants is just 0.6 per cent of annual gross property income per month, it said.
The capital raising will strengthen SCA’s balance sheet and give it flexibility to deal with the crisis, topping up its liquidity to $550 million, Macquarie Bank analysts said.
On an annualised basis, the raising will be 10 per cent dilutive to funds from operations. “The strategic rationale behind the raising we believe is sound,” they said.
SCA’s specialty tenants are heavily weighted toward non-discretionary categories. “Many of these specialty tenants are trading strongly, including pharmacies, medical centres, discounters, liquor and fresh food retailers,” SCA said.
“With over $550 million in cash and undrawn facilities following the equity raising, we will be in a position to act quickly,” Mr Mellowes said.
The coronavirus uncertainty prompted SCA last month to withdraw its full-year earnings and distribution guidance. The group said it was focused on making sure its tenants can weather the crisis and resume normal business once the pandemic ends.
“Whilst no abatements have been agreed as yet, SCA will consider requests on a case-by-case basis once March sales figures are made available, with adjustments able to take several forms, including rental deferrals or abatements,” it said.
Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.