Liberty and L2D’s Stuttafords hangover is nearly over — now for Edcon
South African landlords have let most of the space vacated by the defunct department store, and Liberty and L2D are in talks with Edcon, which is ‘rationalising’ its leases
The hangover from the demise of one of SA’s oldest department chains, Stuttafords, appears nearly over for South African landlords.
The Liberty Group and its listed property subsidiary, Liberty Two Degrees (L2D) have finally managed to let space vacated by Stuttafords.
Stuttafords became defunct last year, and the vacated space had been costing the group in lost income. Liberty and L2D have stakes in two of SA’s premier shopping centres, Sandton City and Eastgate.
Other property groups such as Hyprop Investments and the Pareto group have also let the space previously occupied by Stuttafords.
Liberty and L2D are now looking at how to prevent the down-scaling of another under-pressure retailer, Edcon, from affecting their profits.
Hyprop had Stuttafords stores in The Mall of Rosebank, Clearwater Mall and Canal Walk. Financial director Laurence Cohen said almost all of the space vacated by Stuttafords had been filled.
"All we have left is about 1,000m² of the store in Clearwater Mall, having filled 2,000m² of 3,000m² there," said Cohen.
Pareto has filled the space vacated by Stuttafords in the Cresta mall.
Edcon occupies just under 6% of Liberty Two Degrees’ rental portfolio
L2D made the announcements about its Stuttafords space and its discussions with Edcon in a trading update on Tuesday.
The company has been under pressure for not delivering strong enough returns from malls such as Sandton City, Eastgate, Liberty Midlands Mall and Melrose Arch.
It has also been criticised for having a complicated ownership structure and an external management company, as opposed to internal management with interests better aligned to shareholders.
It is simplifying the ownership and internalising its management.
L2D said these moves were in line with its meeting operational objectives.
The group said market conditions were beginning to improve for retailers.
"We are seeing green shoots starting to emerge in the macroeconomic and consumer environments though it is too early to predict this as a sustainable trend," CEO Amelia Beattie said.
"Our portfolio is performing well from a trading perspective, as is evidenced in the turnover growth statistics for some assets and the arrest of declines in others; leasing activities to fill large retail vacancies are on track," she said.
The closure of Stuttafords affected rental income at Sandton City and Eastgate.
At Sandton City, Dis-Chem opened its flagship 1,807m² store, which has occupied a significant portion of the space vacated by Stuttafords.
Pick n Pay Clothing, Ted Baker and YSL also took up space and have begun trading.
Markham, LC Waikiki, Exclusive Books and Dion Wired are due to start trading in the third quarter of 2018.
The remaining 650m² of Stuttafords space at Sandton City is being negotiated and will be occupied by a pop-up tenant until a suitable long-term tenant is found.
The total Stuttafords retail vacancy at Eastgate has been filled.
The new retailers in this space, which include H&M and Mr Price, will start trading in the last quarter of 2018.
The only remaining portion is the office space previously occupied by the Stuttafords head office.
Meanwhile, Edcon Group has announced that it is rationalising its leases.
"L2D has been in proactive discussions with Edcon regarding the turnaround strategy and the assessment of the potential impact on our portfolio," said Beattie.
She said discussions had been constructive and L2D would advise the market on the final outcome once they were in a position to do so.
L2D’s portfolio exposure to Edcon is 5.9% of the total gross lettable area of its portfolio.