Investec Property Fund delays dividend


Investec Property Fund delays dividend

Published Date: 2020-11-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Investec Property Fund delays dividend

The fund has announced a top-up payment on its previous distribution but is holding back on an interim payment for now.

Investec Property Fund (IPF) is playing it safe with its interim distribution due to a second wave of Covid-19 that may impact its portfolio of European properties. It has deferred the declaration of the dividend until there's more certainty about the extent of the disruption. However, it's going ahead with a top-up dividend of 29.8c per share for its 2020 financial year, taking its payout ratio for the year to 95% of distributable earnings.

The real estate investment trust deferred the final dividend for its 2020 financial year until September, when it said it would go ahead with the payment of 39.1c per share after making progress with paying down its debt. The decision was also informed by the Financial Sector Conduct Authority's decision not to grant real estate investment trusts (REITs) any further leeway on their distributions.

Under the JSE's listing requirements, REITs must pay out at least 75% of distributable profits within four months of their financial year end to shareholders in order to retain their status. The FSCA, which is their regulator, granted them a two month extension due to the impact of Covid-19.

IPF has reduced its payout ratio to between 90% and 95% of distributable earnings as it adapts to a persistently weak domestic environment where capital has become scarce. It said this aligned its policy with international market practice and provided a more efficient source of funding for maintenance capital expenditure. It said it would resumed a regular dividend cycle as soon as it was prudent to.

Distributable earnings for the six months to end-September amounted to 46.87c per share, down 34% from last year due to the impact of Covid-19 on its portfolio. It said its SA portfolio was materially affected by the impact of the lockdown on retailers, with net property income (NPI) falling 24% as a result of the pandemic, rental relief and bad debts due to business failures. Its European logistics platform performed in line with expectations despite the pandemic, with 2.7% like-for-like growth in NPI and 14.8% like-for-like growth in distributable earnings. Offshore exposure was maintained at 34%.

The fund said it had completed its degearing strategy after selling SA property for proceeds of R800 million and its stake in Investec Australia Property Fund for R700 million. It also sold a 10% in its Pan-European Logistics platform after transferring two properties in Belgium into the platform.

At the end of September, its loan to value (LTV) had reduced to 43.8% from 47.5% in March. It declined even further to 39.8% following the end of the period. It had R1.4 billion in unutilised cash and facilities.

IPF's shares rose 1.7% to R7.98 yesterday.

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