Travel ban cuts V&A Waterfront’s income in half
Part-owner Growthpoint says the pandemic lockdown has halted tourism in Cape Town
The most valuable commercial centre in SA, the V&A Waterfront, saw its income halve in April and May because of the travel ban imposed by the government.
The restrictions, which halted tourism in the country, were introduced as part of the lockdown aimed at curbing the spread of the coronavirus.
The V&A shopping centre and residential and office complex, which is valued at R18bn, is half owned by Growthpoint Properties, which is SA’s largest property company, and half by the Public Investment Corporation.
Growthpoint has nearly R140bn in assets spread across SA, Australia, the UK, Poland and Romania.
It said in a statement on Monday that the V&A had been “significantly impacted by Covid-19”, considering about 66% of its net property income comes from the retail and hotel sectors. “Both these sectors depend heavily on foreign tourism, with circa 50% of retail sales and circa 80% of hotel occupancies coming from international tourists,” it said.
Collections for these two sectors for April and May were low, decreasing collections for the entire V&A to about 50% of total billings. International and domestic travel ceased in mid-March.
“International tourism is likely to take a long time to return. The SA population will undoubtedly emerge from this crisis much poorer, given the many layoffs and retrenchments, no bonuses and salary increases, and with staff share options now being worth significantly less. Thus, a rapid rebound in domestic tourism is unlikely,” it said.
Rental discounts of R19m and R7m were passed for April and May, respectively, mainly to retailers.
These were in line with the recommendations of the Property Industry Group, which includes representatives from the SA Reit Association (representing real estate investment trusts), the SA Property Owners Association (Sapoa) and the SA Council of Shopping Centres (SASC). The Property Industry Group was formed with the intention of helping retailers by offering rental discounts or deferrals.
Growthpoint’s SA CEO, Estienne de Klerk, is the Property Industry Group’s spokesperson.
Rental discounts of about R1m a month were provided to the marine and industrial tenants of the V&A, specifically to the helicopter operators that are reliant on international tourism. Rental deferments were also offered to a number of hotel operators.
Growthpoint said it had secured a R750m bank loan for three years and was in the final stages of negotiating a further R900m, also for three years.
Growthpoint's share price rose 6.48% to R12.99.