L2D holds back on dividend as it cuts its portfolio value

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L2D holds back on dividend as it cuts its portfolio value

Published Date: 2020-07-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

L2D holds back on dividend as it cuts its portfolio value

The shopping centre owner says it will consider the payment of a final dividend with its full-year results.

Liberty Two Degrees (L2D) has devalued its property portfolio by R1.5 billion due to the impact of Covid-19 on rentals and the length of time it will take to re-let vacant space at its shopping centres. Releasing half-year results, the real estate investment trust said its net asset value had also declined to R7.72, down 19.5% from a year ago.

L2D said due to the losses suffered as a result of Covid-19 and the uncertainty around forecasting, its independent property valuers decreased the portfolio value by 14.7% to R8.7 billion. It owns shopping centres that include Sandton City, Eastgate and Melrose Arch. It also decided to write down the fair value of its investment in Edcon to zero after the retail group started business rescue proceedings in April.

Revenue fell 16% to R400 million for the six months to end-June, with net property income declining by 40% to R202 million as footfall at its centres slumped due to Covid-19 and restricted trading periods under the national lockdown. It reported a R1.4 billion loss before tax, down from profit of R244 million last year. Headline earnings per share declined by 60% to 11.45c and it hasn't declared an interim dividend.

L2D said foot count at its centres recovered to 55% of last year's level in June. In the meantime, it continued to negotiate rental relief with its tenants. By the end of June, just over a quarter of negotiations had been concluded with tenants including listing clothing retailers and major national and international retainers. Just over 85% of the floor space at its centres was trading again, with only gyms and some restaurants remaining closed.

The closure of hotels in its Sandton City precinct, in line with the level 5 lockdown restrictions, had resulted in a net loss from hotel operations of R800,000 compared to a net profit of R6.4 million for the comparative period. Although the Sandton Sun hotel had recently reopened, occupancies remained low. It expected the remaining hotels to start trading once conditions had improved.

The company said its balance sheet remained strong and it was satisfied there were sufficient cash reserves and unutilised debt facilities to cover its business commitments. It said it would consider the payment of a final dividend with its full-year results.

Its shares closed unchanged at R5.10 yesterday.





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