Two of Hong Kong’s biggest landlords reported lackluster results Thursday, early evidence of how deep the retail pain extends in the city.

Losses at Wharf Real Estate Investment Co. sank to HK$4.45 billion ($574 million) for the six months ended June 30 from a HK$7 billion profit the period prior, while Hang Lung Properties Ltd. posted a loss of HK$2.54 billion versus a HK$3.52 billion gain a year earlier.

Wharf owns Hong Kong’s largest shopping center Harbour City as well as the iconic Times Square in Causeway Bay.

The coronavirus pandemic came as a double whammy to Hong Kong, already reeling from months of anti-government protests. Those sometimes-violent demonstrations largely kept mainland Chinese tourists away, hurting everything from shopping malls to hotels. With all international travel off the table, the city’s economy has sunk into a deep recession.

“I’ve been in the industry for four decades and I’ve never seen a time like this,” Ronnie Chan, the chairman of Hang Lung Properties, said at a virtual media briefing Thursday. “We’re facing three things in Hong Kong: the pandemic, the riots last year and escalating China-U.S. tension. These are very harmful to businesses.”

Pressure on landlords is only expected to continue. After brief signs Hong Kong may have beaten back Covid-19, the city is struggling with resurgent infections. The government has adopted strict social distancing rules including banning dine-in services at restaurants and cutting the gathering limit to two as locally transmitted cases climb.

The Hong Kong Retail Management Association recently urged landlords to reduce rents and not take legal action to reclaim space when tenants can’t pay.

Landlord Costs

However, Stephen Ng, chairman of Wharf REIC, said the public shouldn’t put all the pressure solely on landlords.

“Landlords have their own difficulties. Landlords have a lot of expenditures,” he said at a briefing Thursday. “They have to pay interest, loans to the banks, salaries to their employees and taxes to the government. We can’t expect landlords alone to save the world when the business environment is very detrimental.”

Wharf provided cash relief of more than HK$1 billion to tenants during the first half.

Almost all of Wharf’s rental income comes from Hong Kong while for Hang Lung, mainland China contributes slightly more than half. Wharf was downgraded to underweight by Morgan Stanley earlier this month.

Chan said that Hang Lung was experiencing a quick rebound in its mainland China malls, especially for luxury goods sales. In China, Hang Lung owns the 66 series of shopping centers in cities from Shanghai to Shenyang.

The company said in a statement earlier that as Covid-19 subsides in China, the recovery among “retail properties carrying lighter luxury contents has been modest, reflecting a much more prudent approach on the part of both government and business toward resumption of normal life.”

Hang Lung’s properties in Hong Kong include the Standard Chartered Bank Building and Peak Galleria. More tourist-oriented shops like those in Fashion Walk Causeway Bay and Mongkok were the worst hit, both in terms of tenant sales and rental revenue, it said.

Shares of Hang Lung are up 13% this year while stock in Wharf REIC has tumbled 41%.

(Updates with Wharf comments in 8th paragraph.)

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