Big boost for luxury mall owner in South Africa
Liberty 2 Degrees (L2D), the owner of luxury malls in South Africa, including Sandton City, Melrose Arch, and Eastgate, has posted a robust financial performance for the first half of 2023,
In its unaudited results for the six months ended 30 June 2023, L2D said that its operational and financial metrics have continued to improve, despite the muted domestic economic and operating environment – with interest rates and load shedding-related costs taking their toll.
Its portfolio turnover and foot count are now ahead of pre-Covid 19 levels, with the former seeing a 6.8% jump.
Across the group’s portfolio, the demand for space led to an improved portfolio occupancy rate of 93.6%.
In terms of retail, the group said that its portfolio delivered market-leading performance.
Annual trading density grew 13.0% to R51,664/m2 by May 2023. This is higher than the Clur International Q1 2023 all centres benchmark of R39,355/m2.
Moreover, all the centres within the L2D portfolio continued to trade ahead of the prior year’s trading densities, except for Midlands Mall and Lifestyle Centre, which yielded more turnover in the comparative period due to the closure of nearby malls from the KwaZulu Natal riots.
However, Midlands Mall is still trading above pre-covid densities, it said.
“The moderation in turnover growth vs trading density growth in the first half of 2023 is largely due to the higher base in the comparative period post the removal of Covid restrictions as well as the temporary closure of a number of high turnover generating stores for refurbishments during the period,” the group said.
The group said that demand for retail space in its portfolio remains strong.
Moreover, rental reversions were -5.3% across its entire portfolio, with retail renewals improving from -9.7% in 2022 to -0.3% in 2023.
When it comes to financials, the group’s revenue jumped from R290.1 million in H1 2022 to R345.5 million in H1 2023. Headline earnings per share have also increased from 16.84 cents per share in H1 2022 to 19.74 cents per share.
Dividends per share have also jumped from 17.48 cents per share in H1 2022 to 18.77 cents per share in H1 2023.
Outlook
The group said that the macro-environment remains challenging in 2023, with consumers’ disposable income continuing to face several headwinds whilst load shedding continues to limit economic growth.
Despite this difficult operating environment, the group said that all its leading indicators are positive.
The company is also set to be de-listed from the Johannebsurg Stock Exchange.
As reported by Reuters, Standard Bank, which currently owns close to 60% of the group, will acquire the rest of the group’s shares. It is estimated that the transaction will cost the bank approximately R1.8 billion.
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