Mall revenue set to halve this fiscal due to COVID-19 lockdown: Crisil

NEW DELHI:  Revenue of mall operators is set to halve this fiscal because of the Covid-19 pandemic-led lockdowns, an analysis by Crisil of the top 10 malls it rates indicates. These malls have total rated debt of Rs 4,200 crore and cover 7.5 million square feet, with pan-India presence. These have strong sponsors and high debt service coverage ratio (DSCR) of  1.5 times on average.

“We expect a 50-100 per cent lease waiver for the period of lockdown, followed by a 30-50 per cent concession in rentals in the current quarter and the next, which will reduce to 0-20 per cent in the quarter to March.

A gradual build-up in revenue can be expected from the current quarter, though for the fiscal overall, a revenue loss of 45-50 per cent appears to be in order,” said Sachin Gupta, Senior Director, Crisil Ratings. Much of the impact on mall revenue is because multiplexes, food courts, restaurants and gaming zones have not yet opened in many locations as per government orders.

These businesses contribute 22 per cent to the total revenues and are also expected to take the longest to recover. For the other categories, such as apparels, cosmetics, electronics, and bookstores, which contribute 75 per cent of mall revenues, consumption is still low at 30-35 per cent of  previous years’ numbers in the first month of operations  post re-opening. 

With revenues dented, and recovery expected to be slow, these businesses have started renegotiating their contracts with mall owners for waivers in lease payments. Crisil also expects vacancies to inch up to over 10 per cent over the next 12-18 months compared with four per cent as of March 2020.

Cinemas most hit
Much of the impact on mall revenue is because multiplexes, food courts and restaurants have not yet opened in many locations. These businesses contribute 22 per cent to the total revenue and are expected to take the longest to recover