Impact of the Covid-19 health crisis on the Group’s activities

During 2020 and in the first moths of 2021, IGD’s performance was impacted noticeably by the containment measures in place to face the Covid-19 health emergency.

Overall, as far as 2020 is concerned, the “non-essential” activities inside IGD’s shopping centers were closed for 87 days during the year, bringing the tenant sales to close down by about 28% compared to the previous year, a figure in any case better than the market average (source CNCC) and with IGD recording an overall one-off impact of approximately 18.5 million euros, explained primarily by lower revenues linked to the one-off rent abatements, as well as higher provisions and credit losses. This was accompanied by other collateral effects such as, for example, higher vacancies and condominium fees.

In the first quarter of 2021 the “non-essential” retailers located inside IGD’s shopping malls were closed about 48% of the possible days of operation, with marked differences based on location; while in the same period 2020 they were closed roughly 25% of the possible days of operation. If we consider the operating trends, the sales of mall retailers were down in the quarter (-14.4% vs 2020), but the positive trend seen in 2020, with less frequent, but more targeted, shopping continued, however:  in the first quarter of 2021 the average ticket, in fact, rose more than 21% against the same period 2020 and +29% against the first three months of 2019 to around €27.4. Finally taking into consideration the economic and financial results of the Company, while the pandemic did not have an economic impact on the first three months of 2020, in the first quarter of 2021 a one-off impact of roughly €5.4 million was recognized.

In light of the loss recorded by the parent company (which waives the distribution requirement) and with a view to safeguarding financial stability and the investment grade profile, the Shareholders’ Meeting held on 15 April 2021, resolved not approve distribution of a dividend for 2020. This difficult decision is to be viewed as one-off and unforeseen, triggered by the exceptional circumstances that developed as a result of the pandemic; as soon as conditions allow, the Company intends to resume paying dividends and providing its shareholders with attractive remuneration.

Surge in the pandemic from October 2020 and gradual elimination of the restrictions

The arrival of dall was accompanied by a new surge in the pandemic in Italy, and in other countries worldwide, with infection rates growing all over the country. As a result, beginning on 23 October 2020 first a few regions, and then the Government with the Presidential Decree approved on 6 November 2020, which introduced the regional classification based on based on the level of risk, adopted new restrictions which limit shopping center operation. This decree reduced the operation of shopping centers mainly during the weekend (but in more critical areas, also during the week), allowing only stores providing merchandise deemed essential (like foodm pharmaceutical and para-pharmaceuticals goods, tobacconists and newsstands)* to remain open.

With regard to Romania, the national restrictions adopted are limited to evening curfewa, while the local governments have enacted more stringent measures like closing restaurants and cinemas, as well as game and entertainment centers. Contrary to a few of our competitors, our portfolio is, however, less exposed to the catogories subject to the restrictions.

IGD continued to monitor the situation carefully and guaranteed the highest hygiene and safety standards already adopted by our shopping centers in the past. Our centers, however, have never been totally closed, even during the full lockdown last spring, continuing to guarantee the community’s access to essential services.

On 21 April 2021 Italy’s Council of Ministers approved the “Reopening” Legislative Decree which outlined the timeframe for the gradual elimination of the restrictions in place by taking into account the numbers relative to the epidemic and the status of the vaccine roll-out. In particular, from 22 May 2021, in the yellow zone, the commercial activities inside the shopping centers are open also on holidays and days before holidays, always in compliance with the protocols and guidelines already adopted. From this date, therefore, our shopping centers are all back almost completely operational.

*For a complete list please refer to the DPCM and other implementing decrees adopted by the regional governments.

How did we deal with the first lockdown phase between March and May 2020 and the following temporary return to normality?

Following the spread of Covid-19 in Italy and the consequent health emergency, beginning 23 February 2020 different local administrations and the national government gradually put more restrictive measures in place for our shopping centers, initially in the Milan area, subsequently in Lombardy and a few regions of northern Italy and, lastly, as of 12 March 2020, throughout Italy. The same situation occurred in Romania, starting from 22 March 2020, the government has adopted restrictive measures very similar to those in force in Italy. 

Subsequent to the lockdown, IGD moved quickly to guarantee that all the people working at its headquarters and shopping centers could continue to be operational and customers could continue to make purchases in complete safety. Our shopping centers never closed as they house retailers which provide essential goods and services.  

The virus containment measures imposed resulted in significant changes being made to the operation and organization of shopping centers: changes that we can affirm to have successfully implemented.