Ahead of its year-end closed period, retail-focussed real estate investment trust (Reit) Liberty Two Degrees (L2D) reports that its portfolio is expanding, with yearly trading density growth in September being 18.6% ahead of levels at the same period in 2021 and 12.1% ahead of those in 2019.

The top five retail categories with the most improved trading density performance for the year-to-date, compared with 2019, include luxury brands improving by 149.2% year-on-year, technology being 44.5% up, luggage and leatherware with a 35.4% improvement, an 18.8% improvement in grocer/supermarket and a 9% increase in the period for health/beauty/grooming/wellness.

L2D notes that this improvement has been achieved despite the impact of the challenges relating to loadshedding, escalating municipal rates and Covid-19-related in-force reversions, all of which continue to put pressure on the company’s portfolio.

The Reit also achieved a 29.6% year-on-year improvement in footcount for the nine months to September 30. This year’s growth is a 9.8% improvement in footcount compared with the nine months to September 30,  2019.

L2D points out that its super-regional malls achieved double digit growth year-on-year during May to September.

The company says its footcount growth was driven by the various experiential initiatives that dominate its precincts, leading to L2D winning 29 awards in this year's Footprint Marketing Awards.

In terms of leasing for the year-to-date, L2D concluded 281 leases totalling 68 885 m², including 102 new deals totalling 32 701m², and 179 renewals worth 36,183m².

The portfolio reversion at the end of October has seen significant improvement, tracking at -10%, with retail reversions in the retail sector at -9% and office reversions tracking -26.2% with a focus on retention.

CE Amelia Beattie says the future-proofing of the business remains L2D’s commitment and a way to ensure that it drives value and positive recovery. “We are pleased with both our financial and operational performance in the period, which continues to show encouraging improvement in key indicators.”

She adds that L2D’s focus remains on driving positive outcomes to counter and address the challenges presented by the operating environment through the various initiatives in place, to ensure the company continues to track the positive momentum in its business performance for the long term.

The company’s occupancy levels remain high at 93.2%, with future pre-lets improving to 93.9%.

The occupancy rate in the retail portfolio improved to 98% by October, up from the 97.2% of June. Including pre-lets, the retail occupancy is at 98.3% and remains well ahead of the second quarter US finance company MSCI’s retail benchmark of 94.2%.

Together, L2D’s Sandton and Eastgate malls have maintained a combined occupancy of 97.5%, ahead of the second quarter MSCI Super Regional benchmark of 93.7%.

In the office space, the portfolio continues to face pressure with occupancy levels at 78.8% for October, compared with 83.3% in June. This decline was a result of the sale of the fully-let Standard Bank building.

However, the occupancy level in the remaining office portfolio (excluding the sale of Standard Bank) has improved since June owing to increased leasing in Sandton, Atrium on 5th and Nelson Mandela Square offices.

Hotels continue to see recovery in occupancy levels ahead of the Covid-19 impact, with Sandton Sun achieving an occupancy of 81.2% in October, taking its average occupancy for the year to 74%, up from 66.8% in 2019.

From an environmental perspective, a focus on driving its sustainability targets has resulted in L2D being awarded a 6-Star Green Star Interiors v1 certification for its office space.

In addition, L2D continues to drive its net-zero waste readiness by 2022 of which the initiatives in place have resulted in an 88% waste diversion rate as at the end of September.

Towards net-zero water by 2025, L2D has achieved a 1% reduction in water consumption compared with 2021 and 35% compared with 2019 as a result of the decline in potable water use in its buildings and other water-saving initiatives.

L2D intends to be a net-zero consumer of municipal electricity by 2030, having commissioned 3 MW in solar capacity, with additional solar structures in the pipeline which include an additional 4 MW and 4.3 MW of solar power at Midlands Mall and Eastgate Shopping Centre, respectively.

Promenade Mall will receive an additional 3.5 MW in 2023/4, with Sandton City and Botshabelo Mall in the pipeline to receive a 1 MW of solar each in 2023.

Further, L2D reports that its ongoing investigations into opportunities in energy wheeling have progressed well, with the impact thereof expected in the second half of 2024.