CAPE TOWN - DIPULA Income Fund, landlord of some 190 mainly retail, industrial and office properties valued at R9.1 billion at August 31, 2020, said yesterday that it would not pay a distribution for the 2020 financial year end due to short-term liquidity concerns.
Notwithstanding, the group’s board said yesterday that it was in “a robust financial position” with loan-to-value ratio at 37.8 percent at December 31, 2020, comfortably within the covenant level of 45 percent.
However, the board said short-term liquidity might be hurt by the Covid-19 pandemic and its associated lockdowns and trading restrictions, which could necessitate additional support to tenants and adversely impact rental collections.
Short-term liquidity might also be affected by the refinancing of debt in a tightening credit environment, with debt providers requiring deleveraging in the short-term as conditions to renewing facilities, the board said.
“In these uncertain conditions, the board was not able to reasonably conclude that, after completing a cash distribution … the company will satisfy the liquidity leg of the solvency and liquidity test. In these circumstances, Dipula is not required under applicable regulations to make any distribution in order to comply with its obligations as a Reit.”
Dipula’s board said they were actively addressing uncertainties relating to its short-term liquidity position.
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