Dividends on hold as companies batten down the hatches


Dividends on hold as companies batten down the hatches

Published Date: 2020-03-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

Dividends on hold as companies batten down the hatches

A growing number of property groups say retaining cash will help them weather the difficult conditions that are likely to continue for the short term.

Hyprop is postponing payment of its interim dividend until October due to the uncertainty the Covid-19 outbreak has introduced to its operations. The real estate investment trust (REIT) says holding back the 309c per share dividend will strengthen its ability to weather the difficult conditions it expects over the next few months.

Although its SA shopping centres remain open, Hyprop says there has been a big decline in footfall since President Cyril Ramaphosa outlined measures to limit the spread of the virus on 15 March. Amongst others, its portfolio includes Cape Town's Canal Walk, Clearwater outside Johannesburg, the Rosebank Mall and Hyde Park Corner

Its European operations were even more affected after the governments of Bulgaria, Montenegro, Macedonia and Croatia closed shopping centres almost entirely, with only supermarkets and pharmacies continuing to trade. It owns a majority stake in Southeastern Europe shopping centre owner Hystead. Its malls in Ghana and Nigeria remained open.

Hyprop said it was coming up with plans to assist tenants, for example by reducing compulsory trading hours, creating facilities for online shopping collections and encouraging shoppers to continue using its malls safely.

Redefine Properties said while it recently emphasised its ability to meet its solvency and liquidity obligations, it had decided to defer its decision on a dividend payment for the six months to end-February until the release of its annual results in order to give it financial flexibility and bolster its liquidity. It also withdrew guidance of a 5-7% decline in distributable income per share for the year to end-August due to the evolving market conditions.

Redefine owns 45% stake of Polish retail property group, EPP (formerly Echo Polska Properties), which yesterday said that due to uncertainty on the duration and impact of Covid-19 on its operations, it had decided to preserve its financial liquidity and would postpone payment of the 5.82 euro cent dividend it declared for the six months to end-December. That would add €53 million to its undrawn debt facilities of €95 million, keeping it well capitalised. Although the Polish government had announced a €47 billion financial aid package, including employees' protection support, liquidity support for companies and increased spending on public investments and infrastructure, it said the details still had to be ironed out.

Fortress REIT said due to the unprecedented volatility and extreme uncertainty currently prevailing in capital markets, a subcommittee set up to consider its capital structure had recommended that the process be discontinued.

NEPI Rockcastle, which owns shopping centres in Central and Eastern Europe, said two-thirds of its lettable area was rented to large international and nation tenants, lowering the risk of tenant default. Also, two of its largest tenants, supermarket chains Auchan and Carrefour, were estimated to have higher-than-usual sales in the coming period. Last week it said payment of its second-half distribution of 27.31c per share would proceed as planned.

Hyprop's shares fell 27% to R20 yesterday while Redefine dropped 26% to R1.62 and EPP shed 17% to R5.81. Fortress's A shares closed 8.5% down at R11.35 and its B shares declined 13% to R2.25. NEPI Rockcastle retreated 19% to R57.82. Its announcement was made after the close of trade.

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