Mall giant Vicinity Centres cancels dividend and sets $1.4 billion raise

Australia’s second largest shopping mall manager Vicinity Centres cancelled its dividend on Monday and said it planned to raise A$1.4 billion as a buffer against the impacts of the COVID-19 pandemic.

Vicinity, which operates 70 malls in Australia, said it would ask corporate investors for $1.2 billion and retail shareholders for another $200 million. CEO Grant Kelley said the funds would provide “flexibility to respond to the uncertainty caused by COVID-19 and the evolving retail landscape.”

He added that the company would likely cut the value of its assets by up to 13% or $2.1 billion this month. The company was still negotiating with tenants, and stabilisation of rent income remains uncertain.

While Australia has seen relatively few cases with about 7,200 infections and 103 deaths by Monday, brick-and-mortar retailers have been among the worst affected companies with landlords like Vicinity forced to renegotiate leases to match a collapse in sales.

However, Vicinity did point to improving footfall since April when a stay-home order was still in effect. With restrictions lifting, traffic was 74% of its year-earlier level, compared to 50% in April.