Hoping to hold off the uncertainty surrounding the shopping centre retail space during the COVID-19 crisis, Vicinity Centres is looking to raise over $1 billion in an equity raising.
The effort will consist of a fully underwritten institutional placement to the tune of $1.2 billion, and a non-underwritten security purchase plan (SPP) for a further $200 million.
“We are taking decisive action to strengthen our balance sheet and provide Vicinity with flexibility to respond to the uncertainty caused by COVID-19 and the evolving retail landscape,” Vicinity Centres chief executive Grant Kelley said.
“This equity raising, combined with a range of cost and capital reductions implemented to date, significantly strengthens Vicinity’s financial position. It provides capacity to invest in our assets to ensure they continue to deliver on consumer, retailer and community expectations.”
Securities under the placement and SPP will be issued at a fixed issue price of $1.48 per security – an 8.1 per cent discount on the last close price of $1.61 on 29 May – and wil rank equally with existing shares.
Since the COVID-19 crisis began Vicinity has seen about $1.8 billion to $2.1 billion wiped from its property value according to a preliminary draft valuation.
While Vicinity approximates that 80 per cent of stores across its portfolio are now trading, in April as little as 42 per cent were open at one time. Foot traffic fell to a low of 50 per cent the same period last year in April, though has rebounded to around 74 per cent.
As further measures to reduce its operating costs, Vicinity has also deferred all non-critical capital expenditure, reduced work hours for 70 per cent of its staff, and reduced director fees and executive committee salaries.
While many shopping centre operators introduced new ways to connect customers with their brands during the lockdown period, retail trade still saw the largest month-on-month fall in the ABS’ history in April – down $5.3 billion.