Octodec guides on lower distribution


Octodec guides on lower distribution

Published Date: 2020-11-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Octodec guides on lower distribution

The property group is required to make a distribution by the end of February in order to retain its REIT status.

Octodec Investments says it plans to take advantage of a two-month extension granted to real estate investment trusts (REITs) before they have to declare distributions to shareholders. That means, in order to retain its REIT status, it is required to make a distribution by the end of February, six months after its year end.

In an updated trading statement, the property group said distributable income for the year to end-August would be 22% lower than last year. It's required to pay out at least 75% of distributable earnings as dividends. In April, it decided not to pay an interim dividend for the six months to end-February and withdrew its previous distribution guidance due to the possible fallout from Covid-19.

At the end of February, Octodec had a portfolio of 280 properties worth R12.6 billion. It invests in various property sectors, including the defensive residential sector, focusing on properties that offer affordable rentals in densely populated urban areas. These are mostly in the Tshwane and Johannesburg CBDs. Just over two thirds of its rental income is derived from its Tshwane-based properties, with the rest coming from Johannesburg rentals.

In a July update, it said impact of the lockdown restrictions on its operations had been challenging. While the operating environment remained fluid, trading conditions had improved as the economy progressively reopened. The majority of commercial tenants were afforded discounts rather than deferments or payment plans, especially small, medium, and micro enterprises, which continued to be the most affected. On the retail front, Octodec said its shopping centres and shops were well located and had been supported by customers. Its residential portfolio also remained resilient with relief measures only provided under exceptional circumstances and mostly in the form of payment plans.

Its results are scheduled for release today. Its shares rose 7% to R6.60 on Friday.

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