Finance Finance News Westfield shuns JobKeeper as biggest rival scoops up $22 million

Westfield shuns JobKeeper as biggest rival scoops up $22 million

Westfield's owner, Scentre Group, has confirmed it is not on JobKeeper payments. Photo: Getty
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Australia’s two biggest shopping centre owners have confirmed to The New Daily the starkly divergent approaches big business is taking to the federal government’s $100 billion-plus JobKeeper program.

And the scheme appears to be playing a major role in the ongoing battles between landlords and retailers on the question of who should suffer the most pain – and receive the most taxpayer support – from the COVID-19 shutdowns.

Scentre Group, parent company of Westfield, is playing hardball trying to maximise its rent receipts and this appears to be partly because it is proudly staying away from JobKeeper, even though it may well qualify.

When asked to comment after being told that rival Vicinity Centres, which owns 64 Australian shopping centres, is on JobKeeper, a Scentre Group spokesperson pointedly told The New Daily:

“We didn’t apply for JobKeeper because we didn’t need to. We think this was the right thing to do as a government assistance program like this should be accessed by those in greatest need. As mentioned in our ASX statement on 6 August, we were cashflow positive (to the tune of $250m) for the half.”

This is certainly a very different approach to Solomon Lew’s Premier Investments, owner of retail brands including Smiggle, Just Jeans, Peter Alexander, Portmans and Jay Jays.



Premier has been refusing to pay rent to landlords globally and told the ASX on August 13 that it was headed for record half-year profits after “maximising the significant various global government rent and wage subsidy schemes”.

When Scentre Group talks about “those in greatest need”, it presumably is not thinking of Mr Lew, who is arguably Australia’s toughest tenant and has amassed personal wealth valued at $2.83 billion in The AFR’s 2019 Rich List.

Meanwhile, when it comes to JobKeeper, Vicinity Centres has taken a completely different approach to Scentre Group, with a spokesperson telling The New Daily:

“As you would know and can see from our results (a $1.8 billion loss), the retail property industry has been significantly impacted by COVID-19. Vicinity was eligible for JobKeeper as we met the requirement of an expected decline in turnover of 50 per cent or more (comparing anticipated turnover for the June 2020 quarter with turnover from the June 2019 quarter).

“Up to 30 June, we received $10.8m from JobKeeper. Through to September 2020 we expect to receive a similar amount ~$11m. For JobKeeper 2.0, we will undertake a final assessment closer to the time, but our current expectation is that we will not qualify.”

The interesting thing about JobKeeper is that it has provided far greater support for retailers than landlords and the retailers have enjoyed the twin benefits of reduced rents and soaring online sales.

Solomon Lew’s Premier Investments has refused to pay rent. Photo: AAP

This explains why shares in the likes of JB Hi-Fi have hit a record high in recent days, but both Scentre Group and Vicinity are trading at significant discounts to the published valuations of their shopping centres.

Vicinity says that accessing JobKeeper has given it more capacity to provide rent relief, which it values at $169 million so far during the pandemic “with $109 million of that amount being waivers of rent that would otherwise be payable”.

The threshold for qualifying for JobKeeper is a 50 per cent cut in revenue for companies with turnover above $1 billion, and Vicinity pointed out that “only 38 per cent of rent has been collected in the June quarter and rent collection continues to be under 50 per cent as we continue our negotiations with our retailers”.

Scentre Group certainly appears to be taking a tougher approach to rent collection as by choosing to shun JobKeeper it has no incentive to achieve a 50 per cent drop in revenue.

Indeed, Scentre last week temporarily closed 129 stores rented by the listed Mosaic Group, which owns brands such as Katies, Millers, Noni B, Rockmans and Rivers.

This hardball approach to rent collection is clearly making an example of a tenant that is above the $50 million revenue cutoff in terms of the federal government’s code of conduct for rent relief, and it sends a very loud message of what might be coming for Premier Investments if it continues with its current tactics.

Meanwhile, two can play this game.

Mr Lew chose to make an example of fellow Rich Lister Sam Tarascio Jr when Premier Investments closed its Smiggle store at his Victoria Gardens shopping centre in Richmond last week, reportedly in response to Sam’s public complaints about cashed-up tenants like Solly not paying the rent and maximising their JobKeeper claims.

It will be interesting to see how Premier and Scentre Group resolve their disputes as they are the two toughest players in their respective retailer and landlord camps.

Westfield doesn’t want any government bailouts, but it does want tenants to keep paying the rent, particularly if they are receiving large government subsidies and enjoying record profits.

Both Scentre Group and Premier Investments are due to release their results in coming days.

Frankly, given the turbo-charged growth in online retail, you wouldn’t want to be a bricks-and-mortar retailer at the moment, particularly when compared with the performance of online retailers like, which has seen its shares soar from a low of $3.79 in March to Friday’s close of $21.70.

The big shopping centre companies need to be very careful not to drive more of their tenants ever faster down the online road by pushing too hard on leasing deals – particularly once the JobKeeper program wraps up.