Good morning, everyone, and thank you for joining us today for Vicinity's FY 'twenty one Interim Results Briefing. I'm Grant Kelly, CEO and Managing Director of Vicinity. Joining me on the call today are in speaking order Nick Schiffer, our Chief Financial Officer Peter Huddle, our Chief Operating Officer Carolyn Viner, our Chief Development Officer and Justin Mills, our Chief Innovation and Information Officer. I'll begin today's presentation by outlining our key results and achievements for the 6 months to 31 December 2020. I'll then explain why we believe Vicinity is well positioned to take advantage of the current market as it continues to recover and will also cover the highlights from our sustainability program.
Nick will provide an overview of the financials and my team will then take you through their respective areas of focus. I will then wrap up and open up the lines for any questions. Turning first to the results on Page 4. And Vicinity's underlying performance represented by funds from operations or FFO was $267,000,000 for the period or $0.057 on a per security basis. Conservatively, we declared a distribution of $0.034 for the period.
On a statutory basis, Vicinity recorded a net loss of $394,000,000 impacted primarily by the 4% or $572,000,000 decline in property valuations over the past 6 months. However, due to the decisive action taken in June last year to raise capital in the midst of the pandemic, Vicinity's balance sheet remains strong with significant liquidity and strong investment grade credit ratings. In markets that were not heavily impacted by COVID-nineteen, we have seen 2 quarters of positive sales growth, providing confidence in the retail recovery. 72% of gross rental billings in the half have been collected or 90% net of rental waivers and our portfolio remains close to full. In terms of development, we have had strong performance from Kmart since opening a major expansion project at Ellenbrook earlier in the period.
In our first residential development, more than 1,000 residents have moved into Golden Age's Sky Garden above the Glen, which has resulted in a significant foot traffic increase. And we've taken advantage of the desire of governments at all levels to stimulate economic activity with the acceleration of planning and approvals for the next round of mixed use and retail developments across our portfolio. Importantly, we have achieved this without committing significant capital to date. Finally, we continue to be recognized for our leading efforts in sustainability, which I will describe in more detail shortly. Turning now to Slide 5 and why we believe Vicinity is well positioned for the current environment.
COVID-nineteen has of course had a profound impact on the Australian economy and our business. That being said, the managed response by government and the public has been highly effective. Governments across the country have paved the way for Australia's economic recovery with unprecedented levels of stimulus, accommodative monetary policy and by encouraging private investments more broadly. And as you can see on this slide, this has supported a significant increase in consumer sentiment, particularly over the past 6 months, rising to a 10 year high in December. These data points support our view that Australia is in a very strong position compared to its global peers.
Nonetheless, there is the potential for COVID-nineteen to continue to disrupt activity in the months and years ahead. And of course, we would like to acknowledge all Victorians currently in the midst of a short term lockdown. The rebound in workers and Vicinity and visitors excuse me to cities has been slow. But interestingly retailer demand for Vicinity's CBD assets remains high. Similarly, while we know that 2020 has driven a step up in online activity for retailers and consumers, at the same time Vicinity has taken the opportunity to accelerate its data, digital and e commerce initiatives, which Justin will elaborate upon shortly.
And so in summary, despite the challenges of 2020, Vicinity is we believe well positioned to take advantage as the Australian economy continues to recover. In part due to the significant retailer support, which we and other shopping center landlords provided during the pandemic, particularly to SME tenants, our retailers are in a relatively strong position for the year ahead. Additionally, while there has understandably been some softening in portfolio occupancy, our centers remain close to full. And in fact, many retailers are thriving in the current environment and looking to grow their footprint as Peter will talk about shortly. But perhaps most importantly, Vicinity enters 2021 supported by a strong balance sheet as Nick will cover off in the next section.
Turning to our sustainability performance on Slide 6. And in 2020, we continue to receive strong recognition for our sustainability program. Vicinity was one of only 2 property companies in Australia to be included in CDP's Global Climate A List. We were ranked 3rd Australian Retail Company in the GRESB survey and we ranked 7th amongst our real estate peers globally in the Dow Jones Sustainability Index. Of course, the past year has also placed a spotlight on human rights and we are focused on addressing modern slavery in our supply chain with particular attention paid to high risk industries like security and cleaning.
In terms of other environmental initiatives, our industry leading solar program has helped us to increase our portfolio average neighbor's energy rating to 4.6 stars, up from 3.9 stars last year. And we continue to make good progress towards our target of net zero carbon emissions by 2,030. And finally, with the health and safety of the public and Vicinity employees paramount, we have COVID safe plans across all of our assets, which gives our customers and retailers confidence in shopping and trading in our centers. I'll now hand you over to Nick to cover off on our financial performance.
Thanks, Grant, and good morning, everyone. I'll start on Slide 8. The first half of FY twenty twenty one has remained challenging with Vicinity recording a statutory net loss of $394,000,000 after a 4% reduction in the valuation of the portfolio. FFO was also down by approximately $70,000,000 or 21% compared to first half FY 2020, due largely to the impacts of COVID-nineteen on net property income, which I'll talk to further shortly. Pleasingly, however, the actions we took in response to the initial outbreak of COVID-nineteen in FY 2020 continued to mitigate some of these impacts.
Firstly, our gross corporate overheads reduced by $6,800,000 as we continue to maintain our focus on discretionary cost areas and receive JobKeeper through the 30 September 2020. At a net overheads level, this was offset by a material increase in insurance costs and a reduction in internal charges for development and property management activities provided to the Vicinity owned portfolio. Secondly, interest expense reduced by 38,600,000 due to lower drawn debt following the equity raising and the realization of the remaining $25,000,000 benefit from the interest rate swap restructure. The distribution for the period of $0.034 per security reflected a payout ratio of 62.4 percent of AFFO. In deciding on the $0.034 per security distribution for the first half, regard was given to the one off benefits realized over the period, including through the interest rate swap restructure, increased surrender fees and the reduction in the FY 2020 waivers and provisions estimate.
We also took into account the still uncertain operating environment outlook at that point. Onto Slide 9 and net property income, which was down $94,500,000 on the prior corresponding period. As shown in the chart, this was driven by the estimated impact of COVID-nineteen on the first half FY twenty twenty one rental billings of $147,000,000 comprising anticipated rent waivers of $99,000,000 and provisions of 48,000,000 This resulted in approximately 76% of first half FY 'twenty one billings being recognized within NPI. This was partly offset by a $56,000,000 reduction in the 30 June 2020 waivers and provisions estimate as cash collections and trading conditions improved. Other key contributors to the movement in net property income were an elevated level of surrender fees and the impacts of COVID-nineteen on ancillary income and center expenses.
Moving to Slide 10 and cash collections. The material improvement in cash collections over the period reflects the strength of the portfolio post reopening and the progress made on lease variations. As shown on the chart, as at 31 December, 73 percent of gross billings had been received for the December quarter, a significant improvement on the 38% collected by the end of the June quarter. Reflecting our focus on finalizing lease variations, as of last week, the collections for the first half of FY 'twenty one represented 90% of collectible billings after taking into account expected waivers and deferrals. With the SME code currently expiring across all states by 31 March 2020, we anticipate the majority of outstanding short term lease variations will be agreed in the coming months.
Subject to no further material outbreaks of COVID-nineteen, this is expected to further benefit our cash collections. Peter will speak to you further about the status of lease variations shortly. Moving to valuations on Slide 11. The portfolio experienced a net reduction in valuations for the 6 month period of $572,000,000 or 4%. On a portfolio level, this was primarily driven by lower market rents for specialty and many major tenants.
Our premium CBD assets saw the largest decline, down 8.7% due to a slow return to city office workers as well as tourism restrictions. Whilst we expect a longer recovery for these assets, we are strong believers in their long term fundamentals and position as a major as market leading destinations. Chadstone and the DFO portfolio were particularly resilient, evidencing the strength of experiential retail and the increased numbers of cost conscious shoppers. Turning to Slide 12. Vicinity's balance sheet remains strong with gearing reducing to 24.5% over the period and $2,400,000,000 of available liquidity at 31 December 2020.
Our debt exposures are well diversified and well staggered with only $150,000,000 of debt being AMTNs maturing prior to FY 2023. Our weighted average cost of debt reduced 70 basis points over the first half of the year to 2.9%, in large part driven by the short term reset of interest rate swaps, which have now reverted to higher rates. Investment grade credit ratings have also been maintained with Moody's and Standard and Poor's. We believe our balance sheet is well positioned to enable us to navigate through this period of continued uncertainty. I'll now hand you to Peter to take you through the portfolio performance.
Thanks, Nick, and good morning, everyone. I will start on Slide 14 with a review of our portfolio's performance. Australia's COVID-nineteen response has ensured that case numbers have remained low compared to most countries around the world. That said, in the 1st 6 months of the financial year, our performance was materially impacted by the mandatory 3 month lockdown in Melbourne. We also saw a 3 day lockdown in Adelaide and towards the end of the period, the targeted Sydney's Northern Beaches lockdown, which all impacted traffic, sales and consumer confidence.
Foot traffic and sales rebounded strongly when restrictions were lifted, but the start of 2021 has shown the unpredictable impacts of the virus with new cases and restrictions in Brisbane, Perth and of course currently across Victoria. MAC has been significantly impacted by government mandated and voluntary store closures during restrictions over the past 12 months with no sales reported by these retailers while they were closed temporarily. Despite the challenging conditions, we have successfully maintained occupancy at a relatively solid 98% with leasing activity for the half in terms of deal volume only just below that of the prior comparable period. This year, the traditional Black Friday weekend event was expanded to run all week, guided by our COVID state plans. Illustrating the events popularity, during the Black Friday week, we recorded an additional 700,000 visitations to our centers nationally compared to the week prior.
Over the first half, we saw only a minor increase in administrations with upcoming changes to insolvency laws and the removal of JobKeeper and JobSeeker, we remain alert and are working closely with our impacted retailers. Turning to Slide 15. Customer visitation has recovered strongly at most centers with the focus now on our CBD assets as office workers return, while tourists and international student numbers remain limited. For the half year, most Australian states have seen customer traffic return broadly in line with pre COVID levels. Victorian centers outside of CBD saw traffic rebound to circa 80% of prior year levels following the lifting of restrictions in late October.
At the end of January, traffic for the portfolio was 85.3% of the prior year, lifting to 90.6% when excluding CBDs. Visitation during our core trading hours remains resilient. However, it is outside core trading hours where visitation has fallen largely due to ongoing restrictions for entertainment and large format food and beverage retailers, which typically act as destinations during extended trading hours. Despite this, customer shopping habits are now more focused with spend per visit in our centers increasing 16% over November December. Turning to Slide 16.
Portfolio MAT to 31 December declined by 18%. This was primarily due to the Melbourne's 3 month lockdown and the slow CBD traffic recovery. When excluding Victoria and CBD centers, the decline reverts to a negative 2.6%. In a year unlike any other, positive sales trends we're seeing across essentials from supermarkets to homewares. With Australians following stay at home orders, we also saw increased expenditure for leisurewear, sporting goods, electronics, gaming and books to keep households entertained.
As expected, the largest decreases in sales were for those categories most impacted by the pandemic being travel agents, cinemas, other large entertainment and food and beverage operators. Ready to wear fashion has also been impacted by Australians working from home as well as less events and celebrations. Since the Melbourne reopening in late October, our luxury retails have performed particularly well. With international travel off the agenda, some discretionary spend has been diverted to luxury goods. Consistent with our observations around customer traffic, centers in Queensland, Western Australia, South Australia and Tasmania were the best performing from a sales perspective with the latter two states recording growth in MAT.
Turning to Slide 17. Leasing activity for the half was broadly in line with the prior comparable period. We saw a lower level of deal flow during the Victorian lockdown. However, similar to traffic and sales, deal rates quickly rebounded once further certainty returned to the market. While the leasing spread for the period was negative 12.6% to passing rent, down from negative 4% over FY 2020, we have maintained relatively high occupancy across our portfolio in a very challenging period.
Fundamentally, our lease structures remain unchanged, comprising of base rent with fixed increases. In terms of our COVID lease variations, to date we have completed nearly 450 lease extensions, achieving an average extension of almost 15 months. We have made solid progress in finalizing COVID lease agreements with 85 percent of leases either unimpacted, completed or agreed in principle. To date, the majority of relief granted has primarily been in the form of waivers and contained to calendar year 2020. Only a small percentage of leases are receiving rent relief this calendar year and this is mainly related to those in CBD assets or those most impacted categories due to the ongoing effects of COVID-nineteen.
Assistance is also more broadly provision resulting from the extension of the commercial code of conduct for SMEs by certain states until the end of this quarter. Turning to Slide 18. There has been a divergence in traffic and sales performance across the portfolio due to our flagship centers including Chastain, the CBD centers and DFOs having a higher weighting to discretionary retail and a greater exposure to tourism and CBD office workers. This has meant that traffic and sales at these assets has been most impacted over the past year. That said, these assets continue to experience the strongest retail demand represented by relatively better leasing spreads.
Conversely, the core portfolio recorded stronger trade during the pandemic given the essential nature of retail mix at these assets. These assets are more weighted towards SMEs and larger national retailers that either did not have significant omni channel capabilities or are not within growth categories and subsequently experienced less demand. Our priority for the core centers has been to maintain high occupancy to best manage cash flow and subsequently deal terms were for a shorter duration compared to the prior reporting period to enable longer term arrangements to be made in more certain market conditions. Turning to Slide 18. As part of our destination asset strategy, we are a partner of choice for key domestic and global brands, whether they are new or existing concepts.
These brands are highly relevant to the marketplace in which they operate, provide a point of competitive difference and drive the overall offer and productivity of a center. This page highlights brands that have opened stores across our premium, core and DFO centers during this reporting period. These retailers are in growth categories ranging from luxury to athleisure. They include key services, on trend fashion retailers and great food concepts critically important for the vibrancy of our assets in the markets that they serve. I will now pass on to Caroline to provide our development update.
Thank you, Peter, and good morning, everyone. The first half of FY 'twenty one saw our teams focus intently on obtaining multiple project town planning approvals and whole of site rezonings so that we are ready to commence new development projects, both retail and mixed use, on a demand led basis. Importantly, we've secured 10 town planning approvals, and we have now focused on derisking these projects upfront before commencing construction, including by pre leasing a proportion of project income and, as you'll see from the work done in advancing Chatswood Chase, working to reduce project capital expenditure and or phasing the project spend where this makes sense to do so. We've also lodged master plan approvals for the major mixed use redevelopments we have planned for Box Hill and Bankstown, and in the coming months, Victoria Gardens also. In terms of projects delivered, our project at The Glen reached its final milestone in December with Golden Age's 500 plus residential apartments sitting above the center having reached completion.
Approximately 1,000 residents have moved in, which has resulted in a 127% uplift in customer visitation compared to the prior year. And our project at Ellenbrook in WA was completed also, introducing a new Kmart store to the center, resulting in a very material uplift in total center sales. Turning now to Slide 22, with detail on our most significant development pipeline opportunities. At Chadstone, we have just commenced construction of our 1st car parking project, whose aim is to enhance customer convenience. A feature facade will provide a new arrival statement at this entrance to the center as is shown on this slide.
Also at Chadstone, town planning approval was received for an additional 20,000 square meters of commercial office area and expanded dining terrace and leisure precinct as well as the revitalized fresh food hall. Moving out to Box Hill, one of our largest and most exciting pipeline opportunities. Box Hill is one of Melbourne's busiest rail and bus transport hubs, including the future suburban rail loop with significant health and education facilities nearby. The master plans of Box Hill contemplates approximately 300,000 square meters of new developable area. We have launched the first applications for town planning approval, which include a 25 level office tower, a 48 level residential tower and complementary public realm areas.
Before commencing construction of this major mixed use redevelopment, the retail offer will be upgraded and stabilized. With town planning approval secured, this retail project is set to commence this calendar year. Moving now to Slide 23. The mixed use redevelopment of Bankstown Central is an equally significant opportunity for us. The master plan was publicly released in July 2020 and includes the potential for up to 330,000 square meters of new development area, taking advantage of the bus interchange, the future T3 Metro Station and the new Western Sydney University campus, all within 100 meters.
Victoria Gardens is another material development opportunity. Located just 4 kilometers from the Melbourne CBD, the center services the affluent suburbs of Richmond, Hawthorne and Queue. Our master plan contemplates expansion of the center to create a sophisticated new food hall together with more than 800 apartments across 7 towers, and the town planning applications for these projects are on track to be lodged in the coming months. Finally, to Chatswood Chase. The planned redevelopment was deferred to enable us to properly consider the impacts of COVID-nineteen as well as retailer demand more generally.
With the additional upfront planning time, we have reduced the cost of the project by approximately 30%, whilst retaining the fundamental aims of the project. We intend to use the balance of 2021 to pre commit a proportion of the project income and derisk the successful delivery of this project before committing to construction. Located in the wealthiest trade area in the country, we continue to see the redevelopment of Chapquette Chase as one of, if not the most compelling retail redevelopment opportunities we have. So in summary, we still see a tremendous amount of development potential across the Vicinity portfolio, and 2020 was very focused on ensuring that our planned projects are well positioned to advance as the Australian economy continues to recover. I'll now hand you over to Justin.
Thanks, Carolyn. Advancements in technology, the volume of new data sources and a changing retail landscape is making the role of innovation an increasingly important one. COVID has accelerated some retailer and consumer trends, including the transition to increased omni channel and the changing role of the physical store. However, amongst all this change, what seems to be remain constant is that consumers enjoy the physical shopping experience and quickly return to centers as they were able to, as Peter described earlier. We believe bricks and mortar will contribute 80% to 85% of all retail sales in the medium term, making it a critical part of most retailers' businesses, including the ability of physical stores to assist driving online sales as research from Quantium confirmed last year.
Our centers are generating over 340,000,000 shopper visits per annum, which provides opportunity to innovate and grow new income streams. We are particularly focused on innovating in the areas of energy, data and digital, media and partnerships and e commerce services involving last mile delivery, fulfillment and logistics. Recent examples of incubating newer income streams from growth include our media and solar business units that now generate over $20,000,000 of revenue per annum across the portfolio. During COVID, our in house data and digital capability proved particularly valuable. The team built a digital consumer app that provides an incredibly accurate 7 day traffic forecast by the hour to help shoppers better plan their visit and avoid busier times, and you can see an example of that on the right hand side of the slide.
We also built real time center density heat mapping technology to alert operations teams when to mobilize to specific locations to ensure social distancing and customer safety. Finally, we launched a fully digital click and collect service known as Parcel Concierge to facilitate sales that benefited retailers across New South Wales, Queensland and Victoria. These capabilities have and will continue to drive commercial value for the business. Turning now to Slide 26. Ancillary income for the half decreased by 37%, heavily impacted by COVID lockdowns.
Key categories impacted were car park down 63% and CML down 58%. What has been particularly pleasing though is the speed at which they've recovered. The half was a tale of 2 quarters, with total ancillary income increasing by 70% in the 2nd quarter. The standouts were solar, media and car park income, the latter benefiting from increased visitation and commuters preferring to drive over public transport and rideshare. Solar performance was solid and its contribution to income continues to grow.
Solar income now equates to the net property income of our 40th largest center and continues to deliver double digit investment returns with more projects in the pipeline. Our digital screen income was 3% higher than the corresponding period in 2019, an outstanding effort given the duration of COVID lockdowns. This highlights the strength of the sales team and the national advertising platform we've built over the last few years. We'll deliver more screens and extend advertising income on new digital assets such as the consumer database, on device and websites. To further leverage our media platform, a new focus on driving sponsorship income with premium brands such as Lexus, Optus and Afterpay is underway.
This year, we'll book more than $2,500,000 of revenue and is one we believe we can grow further. We see more opportunities like those listed on the right hand side of the slide, and I look forward to updating you on our progress over the next 6 months. I'll now hand you back to Graeme.
Thanks, Justin. Turning now to Slide 28. And in summary, Vicinity is we believed positioned for future growth as the economic outlook improves. Our visitation numbers show clearly that when COVID-nineteen concerns diminish, customers return quickly to visit and shop in our centers. Across the wider portfolio, our flagship assets generated strong demand from current and new retailers despite being heavily impacted by COVID restrictions.
While our core centers showed resilience during the pandemic with an increase in localized shopping and greater focus on non discretionary retail. And importantly, our balance sheet remains strong with significant liquidity. The retail recovery and the tapering off of rental support has meant cash collections are increasing. And we've also taken advantage of government's encouragement of economic activity by accelerating the planning work for our retail and mixed use developments. This is creating considerable added potential within the portfolio.
Vicinity's market leading data analytics and technology capabilities enable us to innovate continually our customer offering, to grow new income streams and to adapt to the ever changing retail environment. In closing, while we have seen a clear recovery in trading conditions, there nevertheless remains uncertainty and risk due to the lingering effects of the pandemic. As such, Vicinity is not in a position to provide FY 2021 full year earnings guidance. We will however continue to monitor conditions and provide further updates as appropriate. I will now open up the lines to any questions and we would appreciate it if you could limit yourself to a maximum of 2 questions please to allow time for others.
Thank
Your first question comes from Simon Chan from Morgan Stanley. Please go ahead.
Hi, good morning, everyone. The first question is probably for Nick Schifffer. Slide 9 in his presentation. Nick, you took $169,000,000 provision and waivers last half, like the June half or the June year end, and you wrote back $56,000,000 today. I'm just wondering, how did you come up with your $147,000,000 of provision and waivers for this half?
Because doesn't that look way too conservative given you took $159,000,000 and wrote back $56,000,000 and now you're still taking $147,000,000 I mean it implies that the proper number should be somewhere around 100 mil or something like that. Can you just give us some insights into how you came up with 147?
Thanks, Simon. I suppose the embedded in that question is where we ultimately or did we intend to be as conservative as we were last year? And clearly, the answer is no. When we came up with the provisioning last year, there was enormous amount of uncertainty around it, not only in the broader COVID climate, but also we had really done very few leasing modification deals by that point. There was a lot of negotiation occurring.
So we have to apply a lot of judgment to the quantum of provisioning. And I suppose in a positive way, it has proved to be conservative. And you'll see, as you've referred to, the €56,000,000 sort of drops out of that. As it relates to this half, though, we think that there is a better amount of transparency driven by the fact that we've done significantly more deals with tenants since June. As a consequence of those deals and also I think having a better appreciation of the impacts of COVID on our tenants and on our centers, we're better placed to estimate the 147, which don't forget is broken up between waivers, which are a direct result of negotiations and provisions, which are sort of calculated.
Maybe the final point is we have, as a result of those learnings, changed our methodology. The methodology around the 147 is much more sort of evidence and statistically based with lower measures of judgment embedded in there. So we feel more confident around it. But clearly, we're in very uncertain times. So we hope that we'll do better than the 147.
Okay. Fair enough. Second question is just for Justin Mills. So Nick's gone through the NOI, the rental income and all that stuff. Justin, I was just wondering if COVID didn't happen, actually the other was worth my question.
How much CML income and car parking income and all that sort of jazz did you miss out on in the first half of FY twenty twenty one as a result of COVID and lockdowns?
Yes. Thanks, Simon. I think if I understand your question correctly, you're asking the decrease because of COVID. It was about $18,000,000 split across car park and CML. So about $12,000,000 for car park, dollars 6,000,000 for CML.
The reason why car park was so high was we have a lot of centers that have pay on arrival. So you've got South Wharf CBD Centers, Bayside, Box Hill, etcetera. So a reduction in traffic immediately impacts your income versus a 3 hour pre period at Chatsworth where it doesn't impact so much. So we do think it will come back. It will come back strongly in the second half.
And with the traffic visitation we're getting now, it should continue to improve. Does that answer the question, Tom?
Yes, it does. And that's my two questions. Thanks, guys.
Thank you. Your next question comes from Grant MacAskill from UBS. Please go ahead.
Good morning.
Can we look at the occupancy number in a bit more detail? I'm very respectable down 60 basis points. But can you elaborate on that, just looking what was the impact on sort of NPI for the half? And if you included the rest of the portfolio, I. E.
Since it's not under development or predevelopment? And then also have you included any pop up stores or that may have traded through that December period?
Hi, Grant. It's Peter. I'll pick up that. Yes, so multiple points to that question. So yes, the 98% is the occupancy number.
What it doesn't include is development centers. So for example, it didn't include Ellenbrook. It doesn't include Roseland still coming out of development, for example, but fundamentally includes the vast majority of our portfolio. In terms of where we're seeing some declines in that occupancy, we did see some increase in vacancies across our CBD centers, but not materially. And as we said, we're sort of managing the cash flow, particularly in our core centers to manage occupancy as we're leasing into more stable conditions.
Grant, could you just repeat maybe that second part of that question?
Maybe December leasing period, pop up stores or anything that may have sort of backfilled some of that vacancy?
Yes. The vacant shop the pop up stores are included. And so that occupancy includes the pop up stores in that number.
Do you know is that a material number worth calling in?
No, not a material number.
Okay. And then maybe just on the development CapEx, are you able to give some guidance on what the plan is on spending over the next 12, 18 months?
Yes, it's Nik. I'll take that. Look, a lot of the work that's obviously underway is very much focused around the large mixed use developments that Caroline has talked to. We continue to be very judicious in the quantum of capital that we're investing probably over the next 12 to 18 months. But beyond that period, we obviously feel much more robust, presumably about the COVID environment as well as the accelerated progress of mixed use by that point as well.
Sorry, how much do you plan on spending?
I'm just We're not providing guidance around the full numbers in that regard. It's the environment is still pretty amorphous.
Okay. Thanks, Nick.
Thank you. Your next question comes from Stuart MacLean from Macquarie. Please go ahead.
Good morning. My first question is just around the corporate costs, dollars 38,000,000 versus $34,000,000 in the PCP. Called out JobKeeper as a benefit to that corporate cost line this half. Just how much was JobKeeper in the half?
So JobKeeper, our total JobKeeper amount was $12,400,000 received in the half, but not all of it flows through corporate overheads. Roughly $5,000,000 was in corporate overheads.
Okay. So let's just use that $5,000,000 So $43,000,000 versus $34,000,000 12 months ago. It's a pretty substantial uptick there, appreciate insurance costs, etcetera. But is that the new run rate that we're looking at
now? So I think what you need to look at is maybe if you look at Slide 8, you can see there that we stripped out corporate overheads relative to the internal charges. The internal charges are the ones that are having the biggest sort of distorting effect, I think, on the aggregate line. The internal charges relate to internal property management fees, which are clearly down because of lower rentals. And secondly, during the period, there's less capitalization of development fees.
So an elevated cost is a consequence. If you look at directly at the gross corporate overheads, there's probably 2 main moving items in there. 1 is JobKeeper that we referred to and the other one was some cost savings that relate to sort of discretionary expenditure, which was around $2,500,000
Okay. Understood. My second one is just around the surrender payment of $16,000,000 Can you just provide a little bit more detail there? What was that on the TCP? Where is that expected to go?
And what exactly was it in relation to?
Yes. So typically, surrender fees are probably more around $4,000,000 or $5,000,000 per annum. DCT, I think it was €4,000,000 We usually don't go into the details of tenant by tenant who has paid it. But listeners might recall, in August last year, we referred to a broader deal that was done with Woolworths regarding their portfolio, which saw the closure of 3 centers sorry, 3 BIG W stores. And as a consequence of that deal, a significant component of the 16 was paid by Woolworths.
So we would not expect 16 to continue. We would expect going back to more a normalized level. Fair to say as well that the changes that Woolworths put through and the other changes are not particularly COVID related.
Thank you.
Thank you. Your next question comes from Christoph Kaczmarek from JPMorgan. Please go ahead.
Good morning. Just with regards to the provisions in the first half of twenty twenty one, could you maybe provide a split between the first and the second quarter?
No, I can't provide a split between 1st and second quarter. We haven't looked at it on that basis. We could think about that data and maybe discuss it offline.
Okay, sure. And then just in terms of the unwind of provisions that came through, I mean, looking forward into the second half 'twenty one, would you given you've had 1.5 months of trade in the near half, should we be thinking that there could be an unwind of provisions in the second half? And if that happens, does that effectively mean that you could be unwinding provisions as in your cash collections could come in above 100% as you agree new deals or agree?
Look, I think at this point in time, we're clearly standing by the 147. I wouldn't want to be on the day of release suggesting that that number is too conservative. Look, I think clearly estimating provisions is difficult. Waivers are more direct because they're much more based around deals that have been done. So we have a greater degree of transparency, as I indicated to an earlier question, around these items relative to where we were 6 months ago.
Maybe a point worth noting, you'll see again on Page 9 of the presentation, we refer to €37,000,000 of cash that we have included in NPI that is yet to be collected. At this point in time, we've probably collected around a third of that. So look, we would like a better outcome than the 147,000,000, but right now we feel the 147,000,000 is an accurate representation for waivers and provisions.
Okay, great. Thank you.
Thank you. Your next question comes from Andrew Dodds from Jefferies. Please go ahead.
Good morning all. Thank you
for your time. Just firstly on the JobKeeper side of things and maybe as a follow-up to Stuart's earlier question. Is there any pressure around paying back the $12,400,000 in JobKeeper that you received considering that you did book a profit this half?
Maybe I can pick that up. I think the thing to bear in mind here is the significant impact which the rentals and waivers that Nick has described has actually had on our business. We mentioned earlier that we have collected about 72% of rental billings or 90% of the revised lease number. And as Nick just described, the provision of $147,000,000 we think is a fairly robust number for today's discussion. But if you look at collectively the total rent relief that we've provided throughout calendar 2020, that number is closer to $215,000,000 and that number comprises $181,000,000 in abatements and $34,000,000 in deferrals.
So the $181,000,000 of abatements is a significant number of outright forgiveness. And I'd point out that the property, excuse me, the shopping center landlord group within the real estate sector is one of the very few groups in any sector, any industrial sector in Australia, which is actually forgiven as opposed to deferred revenues. And hence income has taken an enormous hit. So while we've recorded profitability, as you point out, the reality is that it's way beneath where we would be in a pre COVID environment. And so I feel comfortable that we have actually been prudent in how we've handled JobKeeper.
I think it was the right decision to turn off JobKeeper in September. But certainly from our perspective, it was appropriate given the give ups that we were making on the other side of the equation. And I think that the numbers reinforce that position.
That's great. And then maybe just on specialty leasing spreads, they took quite a hit in the first half down to 12.6%. Are we able just to get a split between the breakdown of new deals and renewals in that? And I guess where the sort of level of holdovers are tracking in the portfolio as well?
Yes. Andrew, it's Peter. The split is fairly even, to be honest. So the difference between renewals and replacements, renewals still have a more positive leasing spread than replacements, but there's only a non material difference, which is unusual, but that's the end result. So there's about 120 basis points difference between them both coming into the 12.6%.
What was that? And the second part of your question, sorry.
Sorry. And then just on holdovers,
if we can just get an idea of how they're sort of tracking.
Yes. In terms of holdovers, it's actually been a fairly productive period for holdovers. We've used the opportunity through negotiation of COVID agreements, particularly with some of the non SME, more national retailers to convert leases into extended terms. So holdovers have come down to around about 6% of total leases once we take into account all leases that are agreed in principle and still to be documented. So that's come down quite a material way since our last reporting period in at the end of June.
That's correct. Thanks, Carlos.
Thank you. Your next question comes from James Drus from CLSA. Please go ahead.
Hi, good morning, Grant and team. Just looking at Slide 16, it looks like a fair difference between the performance of the mini majors and the specialties. Can we can you call out if that is reflective of what's happening in the apparel category as well?
James, I'll pick that up. It's Peter here. It's sort of a tale of multiple stories to be honest. The apparel category obviously was pretty impacted through the COVID period. But within the apparel category, what's been performing extremely well is that Applesure entered that apparel category.
So anything that's ready to wear for work or for events, etcetera, has been impacted through this period of time. Anything that's sporting related in apparel, general fashion, particularly retail that have an omnichannel business has performed particularly well. And apparel and footwear as a category in total performed really well in November December as we were fundamentally out of lockdown conditions with the exception of a little blip on the target of Northern Beaches lockdown towards the end of the December period. So that's sort of and it's similar whether it's mini majors or specialty, not terribly different in terms of apparel and footwear, whether they're specialty or mini majors, it's the same sort of trend.
Sorry, the so in apparel, they're basically both down a similar amount in mini majors and specialties. That's so you're not seeing any competitive issues coming through from many majors over apparel is what I'm getting at?
Well, again, we're not seeing unusual competitive issues other than the competitive issues are those apparel retailers that are not performing well are not really in a competitive environment with the mini majors. And the mini major apparel retailers are typically those that are not in ready to wear fashion and those type of things anyway. So they're more in the fast fashion and general fashion markets. So we're not seeing a huge competitive clash between the 2 more than pre COVID.
Okay. Thank you. And maybe just one more. Just on your expectations sort of rent collection on waivers after the code expires, how do you you probably won't be able to give numbers, but just how you're sort of thinking about that event?
I'll pick that up as well, James. Look, fundamentally, we're seeing a pretty good progress on rent collection. What we did do as a company, clearly, Victoria was more heavily impacted than any other state through the last 12 months and particularly the last at this reporting period. So we had essentially 7,000 leases that had some form of renegotiation. In Victoria, with the 3 month lockdown, we ensured that our focus was on rent collections on other states, allowing Victorian retailers to have a solid November December.
So our focus now has been on particularly on rent collection for SME retailers for Victoria and now CBD assets as sales and traffic have returned. I think you'll see increase in rent collections materially subject to the uncertain environment moving forward. One thing we're obviously conscious of, which goes into some of our thinking around the provisioning is what happens to increase in vacancy post the end of the commercial code of conduct, particularly related to SME retailers. So hopefully that answered your question, but that's what we're thinking of.
Okay. Thank you.
Thank you. Your next question comes from Adrian Dark from Citi. Please go ahead.
Good morning, Grant and team. First question might be for Peter in relation to leasing spreads. Looking at Slide 18, and I'm interested in some of the drivers that you've talked about, conditions stabilizing from a traffic perspective and the like, perhaps offset by an increase in administrations over calendar 2021. Do you see the leasing spreads that we're seeing here as representative going forward? Or are you expecting some change?
Adrian, it's hard to be certain in terms of where leasing spreads would end up. What we are some of the leasing spreads are obviously reflected in these numbers reflect some major impacts as a result of COVID. So we do anticipate leasing spreads will improve beyond the short term once more certainty comes back to the marketplace across the entire portfolio. So across our core DFO, our flagship centers, we expect that to improve. We won't see that in our view until more certainty comes back into the marketplace.
CBDs open up in a more effective way than what they currently are at the moment with return to commercial office workers. And so what we have been doing is ensuring that we maintain a higher occupancy for best cash flow to prepare ourselves with opportunity to lease into a better market, which at this point in time, it's hard to predict, but we are looking for that to occur in the back half of this calendar year and obviously the into calendar year 2022.
Thank you. And then a question in relation to the transaction market. Are there any observations you could make around that? And does Vicinity have any plans to sell assets or acquisitions a realistic possibility at this point?
Thanks, Adrian. It's Grant. Great question. I think, 1st and foremost, we don't have any plans to dispose of assets at this stage. And obviously, we regularly review the performance of the portfolio and the returns we think each asset can generate.
But as you saw from the valuations data, we've seen very robust performance from neighborhood, sub regional centers and the key enablers there being supermarkets and DDSs. In terms of acquisitions, I think it's a really interesting question. Obviously, we've been highly selective in acquisitions over the past few years. But to the extent there are quality opportunities available, which we believe Vicinity could add value to, then we will consider those. Thanks for the question.
Thank you.
Thank you. Your next question comes from Richard Jones from JPMorgan. Please go ahead.
Hi, Grant. Just in terms of guidance, was the guidance going to be provided prior to the latest lockdown in Victoria?
Richard, no. We've got a view. I think Nick expressed it very well earlier in regards to the question on the specifics of the rental abatements and deferrals, which is that we are still in a highly uncertain environment. So the recent lockdown did not materially change our view of the overall macro uncertainty. Hence the guidance observation that we will not provide guidance until such time as we have greater clarity on that macro environment.
Okay. And just one quick clarify for Peter. Just in terms of the releasing spreads, can you just clarify what the average duration of those leases was and how that compares with PCP?
Richard, I'll probably come back to you on the average tenure on it. What I can say is we did about 4.50 deals coming out of COVID as a result of COVID for extensions of leases that led to obviously a reduction in our holdover leases. The average extension just on those COVID deals themselves was about 15 months. Typically, our new leases that the combination of renewals and new leases, it's circa around the 3 year mark all up. But it's taken we've got to blend that into the COVID specific deals.
So let us come back to you just with that definitive number.
Thank you.
Okay. As I understand it, there are no more questions. And so that concludes our formal presentation for today. Thank you to everyone for their time this morning. Before we break, could I just say that shortly before we commence the call, we received news of the end of the 5 day lockdown in Victoria, which we welcome.
We thank the government for their efforts in mitigating a potential outbreak, which seems to have been successful. And our centers in Victoria will be reopening tomorrow. And so on behalf of the entire Vicinity team, we'll close. In closing, we wish you and your families all the very best and well-being. We look forward to catching up with many of you over the coming weeks.
Thanks once again.