This foundation is made of a diverse tenant base, strong balance sheets and healthy cash flows.
On 14 March the government of Spain introduced a national state of emergency in response to the Covid-19 pandemic. One of the requirements of the emergency provisions was that all retail stores in Spain, except for pharmacies and supermarkets, as well as certain service-orientated businesses, are required to close.
These measures will have a direct impact on the operations of Vukile Property Fund’s 82 percent held in Spanish subsidiary Castellana Properties Socimi S.A, which operates six shopping centres and 10 retail parks across Spain.
On 15 March, the government of South Africa also declared a national state of disaster in response to the pandemic, although no restrictions were placed on shopping centre trading at this point.
Vukile said in a statement that it will ensure compliance with national regulations as the primary focus and concern of the management teams is for the health and well-being of their customers, tenants, employees and all stakeholders. The company said that, given the fluidity of the situation, it is not possible to determine the magnitude, duration and full impact that the pandemic may have on its retail operations.
Vukile’s management team is monitoring the position closely and proactively dealing with the challenges posed to tenants and operations.
Castellana has already initiated an engagement process with affected tenants to ascertain the impact of the closures on their contractual lease obligations.
Having evaluated both companies’ strong cash flow positions and debt servicing obligations over the next financial year, Vukile and Castellana management are comfortable that both companies have the required cash resources to meet their respective obligations to banks and other creditors for the period ahead.
The company said in the statement that it remains confident that the quality of both portfolios, which are underpinned by a diverse tenant base, strong balance sheets and healthy cash flows, provide the necessary foundation to manage through the Covid-19 challenges. Once the health situation stabilises, this foundation will position them to continue delivering value and growth for all stakeholders.