Shopping centres face huge pandemic driven revenue gap - PwC

"The revenue gap of shopping centre owners in 2020 stands at between PLN 3.2 billion and PLN 3.6 billion (EUR 721 million to EUR 811 million), which represents about 30-35 percent of annual income," the report estimates. Leszek Szymański/PAP

Polish shopping centres face a revenue gap as much as PLN 3.6 billion (EUR 811 million) in annual income owing to the withering effects of the pandemic lockdown, a new report has revealed.

Produced by PwC in cooperation with the Polish Council of Shopping Centres, and entitled ‘Shopping centres at a turning point. The influence of COVID-19', the report catalogues some of the problems facing shopping centres, which have had to contend with financially debilitating closures this year.

"The revenue gap of shopping centre owners in 2020 stands at between PLN 3.2 billion and PLN 3.6 billion (EUR 721 million to EUR 811 million), which represents about 30-35 percent of annual income," the report estimates.

The hole in the finances stems from the seven-week shutdown of centres in the spring due to the Covid-19 pandemic and tenants' rents being waived, which translates into PLN 1.3 billion to PLN 1.4 billion (EUR 293 million to 315 million). Adding to the gap were the rent reductions offered to tenants by landlords until the end of the year to the tune of PLN 1.9 billion to PLN 2.2 billion (EUR 428 million to EUR 496 million).

While contending with a revenue gap centre owners also have also had to continue to shoulder the running costs of the premises and management wages, while servicing bank loans.

PwC partner Kinga Barchon was quoted in press materials on Wednesday as saying the pandemic had hit both landlords and tenants, and that state-sponsored anti-crisis measures had only helped to a “limited degree”.

The president of the Polish Council of Shopping Centres, Jan Dębski, said properly targeted state aid could help the sector meet its financial obligations, including rents and debt servicing.

"As a consequence it would enable the prevention of market destabilisation, a range of bankruptcies and mass-scale lay-offs," he said.

He added that the shopping centre sector is made up not only of landlords and tenants but also of hundreds of companies involved in servicing the malls such as cleaning, security and facility management. In total the sector employs some 400,000 people.