Wrap Text
Operational Update
LIBERTY TWO DEGREES LIMITED
(Registration number: 2018/388906/06)
JSE share code: L2D
ISIN: ZAE000260576
(“L2D” or “the Company”)
Operational update
This voluntary report provides the traditional update on the operational performance of the property portfolio
of Liberty Two Degrees (L2D) for the first quarter of 2021.
The latest operational data is positive, and we remain focused on ‘The new ABC of rebuilding for growth’
strategy and specifically on responding with Agility, taking a Back-to-basics approach in continuing to build
strong property fundamentals and creating new Communities of merged environments to complement our
precinct-focused strategy.
The most recent monthly turnover data, footcount and occupancy rates at 31 March 2021 are disclosed in this
report. In addition, we provide an update on rent collections and commentary on the latest leasing initiatives.
This update should be considered in the context of the Covid-19 lockdowns that were in force from 27 March
2020 up to 21 September 2020 when the restrictions were lowered to alert level 1. The lockdown was tightened
from an adjusted level 1 to an adjusted level 3 starting on 29 December 2020 and was subsequently lowered
to an adjusted level 1 starting on 1 March 2021. Annual comparisons are therefore difficult to make.
Retail operational trading update as at 31 March 2021
Turnover and Footcount
The retail portfolio has demonstrated a strong recovery in March, growing by 27.1% while turnover in the first
quarter was down by 3.9% compared to 9.3% in the final quarter of 2020.
Sandton City has had a remarkable recovery and achieved its highest turnover in March 2021, compared to
the preceding 5 years’ months of March. Turnover for March 2021 was up by 41% compared to the preceding
year and 2.6% higher than March 2019. The 2021 first quarter was only down 2.1% on 2020 and down 3.5%
on 2019.
All of the malls recorded positive turnover growth in March 2021 when compared to the corresponding month
in the prior year. During 2020, March was impacted with the hard lockdown commencing during the last few
days of the month. The table below reflects the most recent quarterly turnover of the various assets relative to
the last quarter of 2020, as well as the monthly March 2021 turnover growth compared to both March 2020
and 2019. The quarterly portfolio turnover, compared to the prior year quarter, has improved from -9.3% in Q4
2020 to -3.9% in the first quarter of 2021. The trend is encouraging as is the fact that three of our malls recorded
turnover growth for the latest reported quarter.
Portfolio performance
Quarter Quarter Month Month
Q4 2020 VS Q4 2019 Q1 2021 VS Q4 2020 MAR-21 VS MAR-21 VS
MAR 19 MAR 20
SANDTON CITY -4.4% -2.1% 2.6% 41.0%
EASTGATE -13.5% -4.6% -16.8% 16.0%
NELSON MANDELA SQUARE -37.6% -29.5% -38.3% 30.5%
LIFESTYLE CENTRE 8.2% 16.5% 13.6% 30.8%
MIDLANDS MALL -5.1% 0.5% -4.8% 25.4%
PROMENADE -11.7% -6.2% -10.0% 13.3%
BOTSHABELO 11.4% 10.6% 30.2% 12.7%
MELROSE ARCH -28.9% -15.1% -16.7% 21.6%
PORTFOLIO FULL -9.3% -3.9% -6.4% 27.1%
The easing of restrictions in February 2021 contributed to the strong recovery in March 2021, with the portfolio
generating 27.1% turnover growth and 28.5% trading density growth respectively compared to March 2020.
The portfolio’s turnover for March was R1.3bn which was only 6.4% below the 2019 turnover levels.
Luxury brands, which are a unique differentiator for our portfolio, continued to play a significant role,
contributing 8.0% towards total turnover, but only accounting for 1.0% of portfolio GLA, with year-on-year
growth at 109%. Other strong performing categories across the portfolio include homeware and furniture,
technology and apparel.
The January 2021 monthly portfolio footcount was 72.1% compared to January 2020 levels due to the
lockdown restrictions implemented at the end of December 2020. The easing of lockdown restrictions in
February 2021 enabled the portfolio footcount to recover to 81.6% of the prior year comparative month on a
like-for-like basis. The monthly portfolio footcount for March 2021 improved to 99.4% of the comparative 2020
level which was, however, impacted by the initiation of the level 5 lockdown at the end of March 2020.
Occupancy update
In the current economic climate, the retail portfolio has shown resilience and remains ahead of the SAPOA Q4
2020 occupancy rate of 93.9%, with an occupancy of 95.0% at March 2021 (December 2020: 95.3%).
The work from home trend continues to negatively impact the office sector with the March 2021 occupancy
rate at 86.7%, largely due to further office vacancies at Melrose Arch. The office sector remains in line with
the SAPOA Q4 2020 office occupancy. Encouragingly there has been a notable improvement in occupancy
levels, in March 2021 compared to March 2020, at Nelson Mandela Square, Atrium on 5 th and the Umhlanga
Office Building.
Accordingly, there has been a slight decrease in occupancies across the portfolio from 93.3% in December
2020 to 92.8% in March 2021. L2D has focused on sustainable letting with future pre-let deals improving the
occupancy to 93.4%.
We have implemented a new artificial intelligence (AI) customer counting software that provides real time
monitoring and people counting capabilities which will enable us to understand the behaviour of people, objects
and vehicles in the retail environments. The AI software using our cameras system went live on 1 April 2021
and allows us to understand our customers better through advanced data analytics and will also assist with
the safety of our shoppers.
Leasing initiatives
L2D strives to bring new and exciting offerings to our malls and in doing so continues to enhance the customer
experience. Nineteen new deals were successfully secured by 31 March 2021. Total space of 12,622m2 has
been successfully renewed in 2021, 4,052m2 within the retail portfolio and 8,570m2 within the office portfolio.
Adidas will open its first Halo store concept in South Africa at Sandton City which will offer an interactive and
completely revolutionised retail experience, featuring personalised products, localised campaigns and a
premium women’s fitness and fashion offering – a testament to how we support our tenants in delivering a
compelling customer experience. Chanel will unveil its first flagship fragrance and beauty boutique at Sandton
City.
Collections
Rental collections, based on the full amounts due and before any rental relief, have increased month-on-month
in 2021 to 94%1 at April 2021 (January 2021: 84%1).
Finalisation of rental relief negotiations and the fact that all retail tenants are currently trading are assisting the
rental collections positively, however, the environment remains uncertain with certain tenants still recovering
from the impact from lockdown.
Conclusion
L2D successfully achieved a Level 2 B-BBEE status under the Broad-Based Black Economic Empowerment
(B-BBEE) codes. Our Empowerment, Enterprise and Supplier Development and CSI initiatives are aimed at
making meaningful contributions in our environments as well as to the communities in which we operate.
The improvement in retail fundamentals are encouraging and we are pleased with the progress made towards
our rebuilding for growth strategy.
Our pre-close investor update will be held on 28 May 2021 and will include a detailed update.
The information has not been reviewed or reported on by L2D’s external auditors.
This Operational Update is also available at:
https://www.liberty2degrees.co.za/investors/results-centre/
Johannesburg
7 May 2021
Corporate information
Liberty Two Degrees Limited
Date of registration: 10 July 2018
JSE share code: L2D
ISIN: ZAE000260576
(Approved as a REIT by the JSE)
(Liberty Two Degrees or L2D)
Registered Office
3rd Floor, West Office Block
Nelson Mandela Square
Corner of Maude and 5th Street
Sandton
2196
(Postnet Suite 202, Private Bag X9, Benmore, 2010)
Investor Relations
Gareth Rees
Email address: investors@liberty2degrees.co.za
Company Secretary
Ben Swanepoel
Contact information
Telephone: +27 11 448 5500
Email: info@liberty2degrees.co.za
1 Excludes alternative income
www.liberty2degrees.co.za
Auditors
PricewaterhouseCoopers Inc.
Waterfall City
4 Lisbon Lane
Jukskei View
Midrand
2090
(Private Bag X36, Sunninghill, 2157)
Sponsor
The Standard Bank of South Africa Ltd
(Registration number: 1962/000738/06)
30 Baker Street, Rosebank, 2196
PO Box 61344, Marshalltown, 2107
Tel: +27 11 721 6125
Date: 07-05-2021 08:00:00
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