CapitaLand is freezing wages company-wide as one of a series of measures to counter the impact of the coronavirus outbreak on its business, according to a company announcement.
The Singapore-based real estate group said that the wage freeze, which applies to managerial staff and above, will be reviewed after six months or earlier if the “position arising from the COVID-19 outbreak has stabilised”.
In a push to support its retail business, the company is additionally issuing S$2 million ($1.4 million) in vouchers to managerial staff in lieu of a portion of their salary to be spent in CapitaLand’s 18 malls across Singapore.
The company’s board members and senior management will also take a cut in base salary and fees from between five and 15 percent with effect from 1 April as a “show of togetherness and solidarity with its stakeholders”.
“The sudden outbreak of COVID-19 has definitely affected our businesses and those of our partners and tenants, especially in China and Singapore,” said Lee Chee Koon, group chief executive officer of CapitaLand Group.
The CapitaLand CEO added that the extent of the impact on the company’s retail business, which makes up 29 percent of its S$131.9 billion assets under management, would depend on how long the outbreak lasts.
Keeping Dividends Unchanged after Most Profitable Year Ever
With shoppers avoiding retail centres to reduce the risk of catching the virus, the group has additionally proposed to keep a final ordinary dividend of 12 Singapore cents per share for 2019, unchanged from 2018.
The company has made this decision despite recording its most profitable year ever in 2019, with earnings before interest and tax of S$5.1 billion – up 22 percent from the year before.
“This prudent approach will enable the group to remain resilient during this period of uncertainty brought about by the COVID-19 situation,” CapitaLand noted in a statement.
The company said that it will be monitoring the situation and is prepared to “render more assistance if and when needed”.
However, the group also expressed confidence that its business was prepared to work through the current environment.
“Our strong fundamentals position us well to address the challenges brought about by the outbreak of COVID-19 as we steadfastly continue our efforts to grow our business and deliver long term sustainable value,” said CapitaLand Limited’s chairman, Ng Kee Choe.
Shipping 40,000 Masks to Wuhan
With retailers struggling to pay rent as sales fall, CapitaLand said that it is offering rental breaks to tenants across its malls in Singapore, including flexible rental payments and a one-time rental rebate of up to half-a-month for eligible tenants.
Other measures include releasing one-month security deposits for retail tenants in Singapore, to offset rental payments in March, as well as setting up a S$10 million marketing assistance programme to support retailer-driven initiatives and mall-wide promotions to promote consumer spending.
As for its China portfolio, CapitaLand is continuing to waive rent and property management fees at its four malls in Wuhan, while charges at shopping centres in other mainland locations have been halved.
Through its philanthropic arm, CapitaLand Hope Foundation, the company has also pledged about S$2.3 million in donations to support healthcare workers and affected communities in Singapore and China.
This charitable push has included shipping 40,000 surgical masks, 500 barrels of disinfectant, 375,000 pairs of medical gloves, 50 medical ventilators and two negative pressure ambulances to Wuhan.
Growing a Profitable Business Amid a Retail Slump
CapitaLand revealed this set of measures on the same day that it announced that the group’s revenues for 2019 had increased 11 percent from 2018 to reach S$6.2 billion. During the fourth quarter, the real estate giant’s operating profit after tax and minority interests jumped 96 percent compared with the same period a year earlier, to reach S$418.3 million.
The company attributed its rise in profitability to the increase in scale achieved from the S$11 billion acquisition of Ascendas-Singbridge, which was completed on 30 June of last year.