Shopping mall owner feels COVID pinch as tenants leave

• Majestic City owner says retail occupants challenged by pandemic-induced disruptions
• Says formulating a downward rental restructuring strategy to maintain occupancy levels
• Rs.360mn already spent on refurbishing the mall; to be completed by next month

C T Land Development PLC, the owner of shopping mall Majestic City, said it lost tenants during the pandemic outbreak and its immediate aftermath, as the mall’s retail occupants found their businesses being challenged by the pandemic-induced business disruptions, after they were recovering from the Easter Sunday attacks nearly a year earlier. As a result, the occupancy, which is measured by the rented shop space at its Majestic City, has dropped to 77 percent of the total rentable space. 

“Both occurrences caused a drop in consumer sentiment, which in turn impacted discretionary spending. Many of the outlets located at Majestic City were affected. Although the company extended rental waivers and discounted rentals, several tenants opted to cease operations at the MC mall,” said CT Land Chairman R. Selvaskandan in his annual review of operations to the shareholders, last week. 

The company is currently formulating a downward rental restructuring strategy, to maintain the existing occupancy levels at the mall and remains “cautiously optimistic that the actions proposed will stabilise the economic standing of the tenants, strengthen the bonds of goodwill and also lead to improved profitability for the company after the year 2022/23, by the implementation of such a strategy”. 

C T Land Development, a subsidiary of C T Holdings PLC, the owner of Cargills Ceylon, reported revenues of Rs.29.08 million for the three months ended in June 2020, down 78.24 percent, from Rs.133.6 million in the year earlier period. 

“The company immediately shut down the complex from mid-March 2020 onwards and again offered zero and reduced rental schemes to tenants, to enable them to cope with the present downturn and mitigate their losses to some extent,” Selvaskandan said. 

The company reported a loss of 24 cents a share or Rs.19.16 million for the April-June 2020 quarter, compared to 68 cents a share or Rs.55.57 million, in the year earlier period. 

C T Holdings owns a 67.9 percent stake in C T Land Development while the promoters, A.A. Page and J.C. Page, hold a 1.3 percent stake each in the company while L.R. Page holds another 0.6 percent stake.

The company is currently refurbishing the mall and has already spent Rs.360 million on it. The company expects the work to be completed by November 2020. 

While the customer patronage of Majestic City has improved in last few months, the business volumes are yet to rebound, the company said. 

As the shopping mall offers consumer discretionary goods among others, it could take a while before the business volumes to return to former glory levels. 

While most retailers depend on imports to stack their shelves with goods, the import controls on non-essential goods may have also hamstrung the tenants’ business. 

Meanwhile, the changing consumer behaviour, where the rapid shift to e-commerce during lockdowns, may have also challenged the business models of the brick-and-mortar retailers. 

Further, the competition from new and larger rivals during the last couple of years in Colombo may have also pressured the mall to revisit its strategy to regain its lustre. 

“Despite the adversity in April 2020, the board of directors of the company resolved to proceed with the refurbishment of Majestic City, taking the view that the downturn felt at that time would soon reverse and Majestic City would once again attract tenants and customers and continue in its path as one of the premier malls in Colombo,” Selvaskandan added.