INVESTEC Property Fund will pay an interim dividend of 44.52 cents (70.93c) a share for the six months to September 30, 2020, representing a payout ratio of 95 percent of distributable earnings, due to debt successfully refinanced and a modest improvement in the operating environment, a trading update said on Friday.
Distributable earnings a share for the year to March 31, 2021 was expected to be 30-35 percent lower than last year, primarily due to the impact of Covid-19 and the concessions granted to tenants in the first half, joint chief executive Andrew Wooler said in a presentation on Friday.
While local performance recovered marginally in the second half, this was offset by lower accretion from reduced ownership in Pan European Logistics (PEL) and the Belgium assets, and no dividend from the UK investment, he said.
The balance sheet was in a strong position and loan to value was expected at 39 percent at year end, versus 43.8 percent at end September 2020.
The operational performance was improving and evidenced by strong rental collection in South Africa of 94 percent and Europe of 99 percent, for the 11 months to February 2, 2021.
Full year distributable earnings would also be impacted by higher costs linked to refinancing and restructuring within the PEL platform, offset by consistent performance of PEL.
The deleveraging strategy had been delivered on, notably in the form of R5billion of cash proceeds during the year, and short-term liquidity obligations were well-managed.
Like-for-like net property income (NPI) was expected to fall 19 percent driven by Covid-related impact on H1 performance, longer void periods and increasing vacancy.
The South African office NPI fell 17 percent year-on-year, impacted by rental concessions granted, negative rental reversions and increase in vacancy.
In the industrial portfolio NPI declined “unexpectedly” by 19 percent year-on-year due to increased void periods and vacancy, said Wooler.
In retail, NPI fell 23percent year on year given the impact of lockdowns in the first half, resulting in rental concessions and increase in bad debts.
Overall vacancy by income deteriorated to about 8.9percent from 7.7percent in September 2020.
In the European logistics markets, Covid-19 had fast-tracked structural trends, amplifying demand with limited new supply, trends that were driving up underlying rentals and cap rates.
The PEL platform continued to perform well, driven by reductions in vacancy and positive letting reversion, while like-for-like distributable earnings a share growth of 10 percent was anticipated.
Investec Property Fund shares closed 3.61 percent lower at R9.35 on the JSE on Friday.
edward.west@inl.co.za
BUSINESS REPORT ONLINE