Octodec withdraws dividend guidance


Octodec withdraws dividend guidance

Published Date: 2020-04-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

Octodec withdraws dividend guidance

The company says it is committed to assisting tenants to navigate through the period as part of its retention strategy.

Octodec Investments has withdrawn its dividend guidance for the year, saying it is unable to estimate how the Covid-19 pandemic will impact its performance. However, the real estate investment trust (REIT) says the business continuity and safety measures put in place along with property and asset manager City Property Administration are delivering as planned.

In an operational update, Octodec said essential services to tenants had been maintained across its portfolio while it was carrying out non-essential functions remotely.

The REIT has a portfolio of 285 properties that were worth R12.8 billion at the end of its last financial year in August. 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. After reducing its full-year distribution by 1.2% to 200.9c last year it had expected to maintain that payout in the period ahead.

Due to the uncertainty caused by Covid-19, it said it had taken a number of measures to protect its balance sheet and shore up liquidity. These included halting incurring costs on any new projects and curtailing expenditure on existing upgrades. It has also diversified its source of funders after recently securing a 3 and 4-year term loan facility of R225 million each with Absa. It has available cash resources and undrawn banking facilities in excess of R600 million.

While the full extent of the impact of Covid-19 and the national lockdown was uncertain, it said there was an immediate bearing on retail tenants trading in non-essential goods and services which would affect affordability and their ability to honour rent payments.

Octodec said the pay-out ratio for distributions would be evaluated in the lead up to the announcement of its interim results, which are scheduled for release on 22 April.

Its shares rose 4.8% to R7.39 yesterday.

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