KUALA LUMPUR, Nov 3 — CGS-CIMB Research expects tenant dropout likely to be an emerging risk for retail mall owners.
In its note, the research house said the anecdotal events in October point to the potential shutdown of certain departmental stores, which have been negatively affected by falling footfall and tenant sales.
Recent events, which coincided with the reinstatement of the conditional movement control order (CMCO), also underscore the end-June statistics by Retail Group of Malaysia indicating that retail sales for the non-supermarket department store subsegment of the retail sector in the April-June period plunged 63 per cent year-on-year.
“Our preliminary checks on retail malls since the reinstatement of the CMCO are footfall and tenants sales could decline by 20-30 per cent in the fourth quarter of 2020 and concerns about potential tenant dropouts could grow if the deterioration in tenant sales is prolonged,” it said.
CGS-CIMB Research said it does not foresee similar dropout risks, like Robinson Co (Malaya) Sdn Bhd, emerging for other non-anchor tenants as tenancy renewals for the financial year 2021 are in the negotiation stage and are more likely to favour tenant retention, although this may be at the expense of positive rental reversion.
Meanwhile, it retains a “neutral” stance on REITs (real estate investment trusts), with longer lead times for replacement tenants a new and emerging risk for selected malls.
“Robinson’s dropout and cinema shutdowns would temporarily dent earnings,” it added.
— Bernama
